Energy efficiency upgrades that boost home value

Are you thinking about what home improvement upgrades you want to make? The data shows that you’d be wise to throw some energy efficiency upgrades into the mix.

Energy efficient upgrades typically have a high return on investment, as new upgrades cost less in maintenance and typically save a homeowner money on top of that. According to one report from the Appraisal Journal, energy savings return twenty times the annual savings to the value of your property.

Let’s walk through the data on some upgrades that have a high return, what some available tax credits are and how you can get help analyzing how to get the most bang for your buck.

Energy upgrades that boost home value the most

The two biggest boosts in home value from energy efficient upgrades come from upgrading your heating and cooling systems and from insulation.

HVAC

According to our report on what home improvements give the biggest return on investment, HVAC units returned about 71% of the cost. That’s a pretty good return, considering newer HVAC units also save you 30 to 40 percent of your energy costs, depending on the unit you are replacing.

Heating and cooling systems account for a whopping 43% of a homeowner’s energy costs, making the savings really add up. The Energy Department has a guide to help you choose the right equipment (page 16).

Attic Insulation

Insulating your attic has a huge return on investment – 108%. Depending on your home, it can be tricky to do the work yourself, but the Department of Energy has a very helpful guide to figure out how to go about it.

Decreasing air exchange between the inside of your home and outside your home has been shown to result in 20% savings on your energy bill. That savings is the icing on the cake, after you’ve already recouped more than 100% of your costs in increased home value.

Energy Tax Credits

For 2017, the only tax credits that are available for energy upgrades from the federal government are for solar energy systems (if you purchased energy upgrade appliances in 2016, you may be able to get a credit from between 10 and 30 percent on a number of different upgrades. See the details here).

The tax credits available for solar energy are 30% for both existing and new construction. The list of solar energy systems that are eligible includes solar water heaters and solar panels.

Knowing where to put your money

A great way to decide what to upgrade is to have an energy audit done on your home. Some energy companies will do this for free. Just call them and ask. Otherwise, an assessment will run you about $300 to $500. Wait until you are ready to make the upgrades to have an audit done.

An audit will help you pinpoint what you can improve the most and get the best payoff for both in terms of lowering your energy bill as well as boosting your home’s value.

Financing it

If you are looking to spend a lot on energy upgrades, there are PACE energy loans that may be available to you. However, please read this article first about what you need to know about PACE energy loans because they do have some tricky components and drawbacks.

Planning it all out

Not sure how to prioritize your upgrades? Make it simple for yourself and get our free home cost planner. This planner is designed to help you plan out your home improvement costs over time and prioritize them.