The shift toward all-electric living is underway. But if you are a buyer in today’s new home market, how do you navigate the transition to make sure your house is not outdated before you’ve hardly settled in?
The best way, said Matt Power, editor-in-chief of Green Builder magazine, is to concentrate on your home’s biggest energy uses first and tackle other uses as they come into the mainstream.
Here is Power’s list of priorities, which is the same one he recommends to builders looking to get ahead of the march toward net zero.
First, specify high-efficiency electric heat pumps that perform well in extreme temperatures, the veteran journalist advises. And add smart thermostats that can adjust temperatures automatically; they can cut your electric demand by 20 percent.
Meanwhile, current owners who want to switch to a heat pump may be eligible for a credit on their federal tax returns for 30 percent of the cost, up to $2,000.
Next, select hybrid water heater models that employ heat pump technology to extract moisture and heat from the surrounding air, Power said. Look for units with wire controls, leak detection and vacation modes. Install your choice in a spot “where it can do double duty” by providing dehumidifcation.
And with the growth in popularity of electric vehicles, Power puts electric vehicle charging stations one notch above smart appliances. Noting that electric cars and trucks are becoming one of the biggest energy guzzlers in new houses, Power said the timing of home charging needs to be managed, and the home’s wiring infrastructure needs to be set up for both supply and discharge.
But in this all-electric future, your appliances need to be “smarter” than what is, for the most part, being offered today. Today’s models focus more on lifestyle than efficiency, and Green Builder’s research shows most people never use their smart oven or refrigerator features. So, look for units that offer ways to reduce energy and water demands; i.e., shorter washing cycles for dishes and clothing.
Power said the “best tool” for managing energy use is a control center that allows you to see what power you’re using in real time. It will give you “a way to centralize control of all your energy inputs with all your end uses,” he said. Some panels can even be configured to switch power from one source to another during blackouts and outages.
Russian Financial Crimes
There are few specifics, but Russian oligarchs, high-ranking Russian officials, sanctioned individuals and their family members moved a lot of money out of the Motherland around the time Putin invaded Ukraine a year ago. Some of it went into real estate here and abroad.
According to the Financial Crimes Enforcement Network, residential and commercial property in Turkey and the United Arab Emirates “has increasingly become a safe haven for Russian wealth, both legitimate and illicit.”
In one instance, an oligarch transferred more than $2 million to a UAE-based real estate outfit to buy and sell houses. In another, a member of the Russian junta transferred funds to a family member who used the money to make payments on real estate.
FinCEN also discovered that several members of the Russian ruling class moved funds to the United States either before or around the invasion, using the money for “property-related expenses.” In some cases, oligarchs who had been hiding money here for years increased the frequency and value of their transactions.
One wired money to the U.S. that was then used to maintain property he already owns and then sent the proceeds of these real estate investments out of the country.
Meanwhile, the U.S. Treasury Department is moving ahead with new regulations that focus on increasing transparency in real estate transactions. The rules, which should come out this spring, are aimed at preventing “corrupt elites and others” from using real estate “to launder and hide their ill-gotten wealth.”
IRS on the Lookout
The Internal Revenue Service has more than 40 types of abusive tax schemes on its radar, including several involving real estate. These arrangements are aimed at reducing tax liability using gimmicks that are either not supported by the tax code or manipulate the law in a manner that is inconsistent with its intent.
One is a tax avoidance maneuver known as syndicated conservation easements.
A conservation easement is an agreement granting an organization the right to restrict the development and use of property for conservation purposes with the intent of preserving the land or buildings. If statutory requirements are met, taxpayers may donate an easement to a qualified organization and receive a charitable income tax deduction for the appraised value of the easement.
A conservation easement is “syndicated” if a person or company promoting the easement offers multiple investors in a partnership or pass-through entity the opportunity to claim charitable deductions based on the value of the easement in return for cash.
Syndicated conservation easements are legal until the value of the easements, and consequently the write-offs, are improperly inflated. Investments in syndicated easements run in the millions. But deductions resulting in lost federal tax revenue are in the billions.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at firstname.lastname@example.org.