Welcome To Josh's Blog O' Thoughts: Building Our House

Generally speaking, I've always found the energy efficiency federal income tax credits a bit confusing. To my knowledge, there are at least the two different tax credits available to home owners: the Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit.


Nonbusiness Energy Property Credit

This tax credit allows you to recoup some of the money you spent to perform energy efficient upgrades to your home. The catch is that it must be an upgrade that is performed and not a new installation. For example, if you have your old windows replaced with new Energy Star windows, you should be able to take a credit, but if you build a new house, you won't be able to take the credit even if the windows used are Energy Star. Other items that are available for credits include insulation, lighting, heating and cooling, water heaters, and windows and doors. Every item has a maximum credit that can be taken. View the Energy Star website for more information.

What makes this credit even more confusing is that the credit expired at the end of 2007, but was then reinstated in October 2008 not to take effect in 2009.

From the 2008 Federal 1040 Booklet:
The credit for nonbusiness energy property has expired and does not apply for 2008. Form 5695 is now used only to claim the residential energy efficient property credit.

This means that you will NOT be able to take this credit for any energy efficient upgrades you made in 2008. So it really won't be usable on this year's tax return, but if you make any upgrades in 2009, you should be able to claim a credit for them when you file next year.


Residential Energy Efficient Property

This tax credit is available for installations of various Energy Star qualified, high-efficiency products. Items covered under this credit include solar energy systems, wind energy systems, fuel cells, and (as of October 2008) geothermal systems. The Emergency Economic Stabilization Act of 2008 that was passed in October 2008 not only reinstated the Nonbusiness Energy Property Credit (see above), but also expanded the Residential Energy Efficient Property credit to include geothermal systems. Even better, this credit can be used for new construction, AND can be taken for products installed in 2008! This is great news for people who installed a geothermal system in 2008.

This credit generally allows you to get back up to 30% of the investment expense in these systems. This year, the credit for each is capped at $2,000, but from what I understand, the cap will be removed starting next year allowing you to take a full 30% credit. This is even better news for people planning on installing a geothermal system in the next 7 years (expires in 2016).

To take the credit on line 53 of your 1040, you also need to file form 5696 with your return. Your total credit from this form may also be limited by your income or by some of the other credits you may be taking. Please review the instructions for more information.


I Am Taking The Credit

If you followed my blog closely, you would have seen that my family built a new home in 2007/2008 with the completion being in Jan 2008. You also would have noticed that we had a geothermal system put in for our heating and cooling solution. Since the house was completed and put into use in 2008, the installation date of the geothermal system is considered to be 2008. Therefore, I can take this credit on my 2008 return. I can get a credit of up to 30% with a cap of $2,000. This means that the total qualified expenses of the product and installation only needed to clear $6,666 to get me the full $2,000 (it easily cleared this mark). And since a tax credit drops straight to the bottom line, I’m happily I’m getting an extra two grand back from Uncle Sam this year.


Reference


Federal Form 1040 Instructions
Federal Form 5696 and Instructions
Energy Star Website
GeoExchange Website
WaterFurnace Website
About.com Energy Tax Credits
Wikipedia Article - Emergency Economic Stabilization Act of 2008
The Emergency Economic Stabilization Act of 2008

Disclaimer

I am not a tax professional, so this information should not be taken as tax advice. I'm simply stating my understanding of the situation.

It has been 11 days since we planted our yard and things (I think) are going pretty well. Last weekend, the area saw a pretty nasty storm which included massive amounts of rain and even a town-leveling tornado. Luckily our town was not in the tornado's path, but we DID get a lot of rain which ended up washing out some of our newly graded yard. You can see one of the ruts created in this picture:



There was an area on the other side of the house that also experienced washout, but rather than being a 2" deep rut, it washed out more like a delta pattern. I'm planning on coming back later on to fix these areas after the majority of the lawn is established. This will allow me to baby those areas a little more.

The good news is that the front yard and back yard seem to be mostly intact. The back hill also seems to be mostly unharmed. I'm pretty much judging this by the fact that the straw is still spread evenly in those areas, however, I am still worried that some of the seed may have washed away underneath the straw. I'm not sure if that's feasible or not, but if I go out and try to examine the dirt, I have a somewhat difficult time making out individual seeds (those KBG seeds are TINY though). Some seeds could be covered by straw or dirt, but I still wonder if any of it washed away. Hopefully not.

Now for the good news. We are starting to see sprouts in the yard!! I'm guessing that these sprouts are from the Perennial Ryegrass and not yet the Kentucky Bluegrass as it has only been a week and half so far. If anyone knows how to tell the difference between Ryegrass and KBG sprouts, please let me know. Here's a picture of some of the sprouts which I'm assuming are from our Ryegrass seeds (remember I only put down 20% Ryegrass. There were WAY more KBG seeds in the mix):



Here's a picture of some other things sprouting. I'm assuming these are some of the original grasses coming back up from live roots. To me, they look too hardy to be from new seed. Anyone know what they might be?



And of course, there are several weeds coming up as well, but that was to be expected. Overall, I think things are going pretty well, but I am getting antsy to see some more results. Hopefully, the KBG will kick it in to gear and start sprouting!

One of the first things I found difficult about seeding my new lawn was deciding what type of seed mix to use. Where I live, Kentucky Blue Grass (KBG) is the primary grass of choice. Also used in local mixes is Perennial Ryegrass (PR) and Creeping Red Fescue (CRF).

KBG is used as the primary turfgrass because of it's ability to rebuild itself and fill-in bare spots. However, it's drought tolerance is not that great which means it will probably go dormant (brown) in the summer unless watered, but usually revives in fall. PR is usually used because of it's quick germination rate of 7-14 days whereas it can take 21-30 days for KBG to germinate. And finally, the CRF is often used in shady areas as it is more shade tolerant.

A seed mix is a mix of more than one type of grass (KBG, PR, CRF) while a seed blend is a blend of different varieties of the same grass type. Going to any of the local garden/home improvement stores showed that most of the off-the-shelf mixes from companies like Schultz and Scotts are a mixture of these 3 grasses. However, I was surprised to see that KBG was always the smallest part of these mixes. It was typical to see 40% CRF, 40% PR, and 20% KBG.

Initially, I had been turned off to the idea of a mix because my previous yard had very obvious patches of different grass types. I took a long time trying to decide if I should use a mix or just a blend of different KBG varieties. I have virtually no shade in my yard so I had no need to use CRF. This left me with just KBG and PR to choose from.

The Iowa State Extension Office recommended 80% KBG and 20% PR stating that the PR will come in quick and help shield the KBG seeds and prevent erosion. This made sense but I was still nervous. PR is a bunch-type grass meaning it spreads outward in a bunches rather than spreading laterally like KBG. I was concerned I would end up with something similar to my previous lawn with obvious tufts of different grass throughout. The extension office assured me that if the mix was right, I shouldn't have to worry about this. So I took their advice and settled on and 80/20 mix.

The extension office also recommended using 2-3 varieties of KBG in the mix. That way if a particular disease affected my lawn, it would be less likely to kill the whole thing. That makes total sense to me, but with 2 acres to seed, some KBG varieties can just be cost prohibitive. I ended up choosing the varieties I did because they were available in bulk at our local farm supply stores and were reasonably priced. I did throw in a little more expensive KBG (from Schultz) but it is a smaller percentage. Being common types of KBG, these varieties didn't have outstanding scores on the National Turfgrass Evaluation Program (NTEP) ratings, but for the cost, they were about my only option.

So here's what I ended up with for my mix:


45lb KenBlue KBG = 23% of mix
90lb Baron KBG = 46% of mix
24lb Brooklawn KBG = 12% of mix
----------
TOTAL KBG: 81% of mix

36lb Perennial Ryegrass = 19% of mix

Yesterday the weather finally cooperated enough for us to get our rough grading done. The grading project which began on April 7 and ended on April 30, really only took 4 days of grading work. Unfortunately, we go so much rain in April that 4 days of work had to be spread over the whole month.

To see what the yard looked like before the grading check out my earlier post. Here's the pictures of the completed grading:

Front yard:


Back yard (side view):


Back yard (looking down the hill):



In the front yard, the excavator brought up the dirt around and house and fixed the grade so that water will run away from the house and out of the front yard. He also added a bunch of topsoil that he found on the lower portions of the lot. Although it's not "black dirt", it is much better looking dirt than the clay he used to build up the grade.

In the back we have a hill which we were expecting. The excavator used dirt from a hill on a lower section of the lot to build up a flat area just outside the back of the house. The result is that we now have 40-50ft of flat land outside the back of the house, and the hill where he got the dirt from has also been leveled off. On the hill, the excavator did a great job of smoothing it out and making the grade consistent. I attempted to measure the grade of the hill last night using non-precise methods. One measurement came in at 12 degrees inclines and another came in around 9 degrees. So I'm estimating that we have roughly a 10 degree grade overall on the hill. The hill itself is about 100ft long if you walk from top straight down to bottom. The width of the hill pretty much runs the length of the back yard so it is 120ft+ wide. At the bottom of the hill, the excavator smoothed out a nice large flat area and fixed the grade to keep water flowing down the lot to the stream.

Overall, we are really pleased with the way it turned out. We were slightly concerned that the flat area at the bottom of the hill would get too soggy, but the excavator says the water should run off. We've been down there before after a rain and it seemed no worse off than other areas, so I think we'll be OK. The next step is to have someone with a tractor and a disc break up the dirt and get it ready for planting. Unfortunately, the forecast is calling for more rain, so who knows when that will get done.

A while back I posted a link to a demonstration video of the Gerber Viper toilet. At the time, we were researching plumbing fixtures for our new home. The Viper was the toilet recommended by our plumber, but after continually plunging the Crane toilets at our old house, we wanted to make sure the new toilets had performance. After seeing that demonstration video, I was truly impressed. It appeared that the Viper could handle just about anything, and it accomplished all of this being just a gravity-fed, 1.6 gallon per flush (gpf) water saver. If you haven't watched the video yet, I highly recommend it.

For newbies, gravity-fed is your standard flushing mechanism. Pressure-assist is the other option which uses compressed air and less water to flush. A flush of 1.6 gallons is pretty much the standard these days.

While we were impressed with the functionality of the Viper, we were looking for something with a little more style. The Viper is basically your typical toilet with no frills. In our powder room, we had already chosen a pedestal sink from the Kohler Memoirs Classic collection. We were really hoping to have a toilet in the same style, however, the Kohler toilets were very expensive and we didn't have any data to back up their performance. Eventually we found the Gerber Allerton line which contains a pedestal sink and toilet. We didn't like the sink enough to forgo the Memoirs, but the Allerton toilet had certain details that made a close match to the Kohler sink. Notably, the tank and lid have a curved front, the top of the tank lid is slightly recessed, and there is detailing around the base and tank lid rim. Although we liked the looks of this toilet much better, we couldn't find any information about it's performance. The only thing we found was that it uses the same flushing mechanism as the Viper. Based on that, we decided to go with the Allerton in all bathrooms. We teamed them up with some enameled wood seats with brushed nickel hinges for a fully finished look.

After three months of use, we couldn't be happier with these toilets. They have had absolutely no problems flushing and they look great. The only downside is that the tank lever is a little ugly. It's a unique shape and only comes in chrome. For some people that's not a problem, but we went with brushed nickel for everything in the house and these levers are the only chrome we have. We bought some decorative tank levers at Lowe's, but they didn't work for the side-flush lever that these toilets utilize. Not a huge thing, but it's something to note nonetheless. I'll end by saying that I would highly recommend this toilet to anyone.

My family moved into a brand new home at the end of January, and with the weather finally turning nice, it's time for me to work on creating a nice little yard for my family to enjoy this summer. I know that fall is actually the best time for planting, but I don't think we can go a whole season with just a dirt yard. The yard area will be about 1-1.5 acres so sodding is definitely out of the budget. After getting a rough ballpark figure from a landscaper for seeding the area, I have decided to go ahead and do it myself. I have done lots of research in the past in order to resurrect the lawn at my previous home (take a look at the Lawn Care section of this blog), so I have a pretty good idea of what I'm doing. In the process, I plan to document my progress on this blog.

First, let's start with the lay of the land.

Here is a picture of my front yard as of early April:


And a picture of the back:


These pictures were taking before the rough grading was begun. The rough grading did not get done in the fall because the snow came in too early this year. Grading needs to be done in the front to slope the ground away from the house. In the back, we have a slope away from the house, but the grading will be done to give us 40-50ft of level ground out the back of the house before going down the hill. My plan is to seed the front and back yard areas including the hill in the back. The grading is actually in progress right now and hopefully will be done be the end of today or tomorrow.

As for my soil, you can tell that it's not "black" dirt. I believe there is a fair amount of clay in the soil, however, I have been happily surprised by how well it crumbles and how loose the top layers are. I have thought about trucking in black dirt or other organic materials to mix in with the existing soil, but the cost has been prohibitive. The person doing my rough grading is going to try to scape up some top soil from the unused portions of our lot to put on the yard area. I do have hope for the soil as there are currently pasture grasses and other plants flourishing on the untouched areas of the lot. So, in short, I've decided to go with the soil that I have and to make the best of it.

Here's a closer picture of what I'll be working with:


I have not done a soil test for nutrients yet because I'm waiting for the grading to be done. No sense in testing the soil that won't even be used for planting.

After the grading is done, I'll need some way to loosen up the top layer of soil, break up any chunks, and level out the "tank" tracks from the bulldozers. Unfortunately, I do not have any heavy equipment and don't intend to buy any right now. I found a person locally that has a tractor and is looking for odd jobs. I plan to have him come out and give me an estimate to run a Gill over the ground. I believe Gill is a brand name for an implement I know as a pulverizer. You pull it behind your tractor and it breaks up the ground and levels it out a bit.

That's where I stand right now. As I mentioned at the top of the article, I plan to document the whole process right here on the blog, so check back for updates. And as always, if you have suggestions or questions, leave me a comment.

If you've been a reader of this blog for a while, you know that I've had a history of commenting on mortgage interest rates. The main reason was that I was in the midst of building a house and was watching to determine at when I should lock in my mortgage rate for the next 30 years. Well I'm happy to say that the research paid off.

Let's go back in blog history here and see what happened. I started really watching the rates about a year ago when we started doing the math to see if we could afford to build a house. At the time that I was crunching numbers with the bank (May 2007) the interest rate for a 30 year fixed mortgage at my lender was 5.625%; which I considered to be a decent rate. By the time we got ready to build, the rates had risen to 6.25% which was a substantial increase. I wondered if there was a correlation between gas prices and mortgage rates since gas prices had been steadily increasing at that time as well (doesn’t seem to be now).

By early July, I stated in a blog post:

I fully expect to interest rates to come down the second half of the year here. Actually, I've already seen a little bit of a dip.

I knew our build process wasn't supposed to be done until the end of January, 2008, so at this point I was just watching to try to identify trends. Well, interest rates DID start to come down, slowly, throughout the entire second half of 2007.

By the time January hit, I was really watching hard. I was now in the 30 day lock range and was just waiting for a good rate. One day in mid January, a 5.375% became available. I had only seen the rate this low 1 time in the past 7 month, so with 3 weeks until closing, I locked in. I was pretty happy with this rate considering it had come down from 6.25% since we started building.

However, over the next couple weeks, it would inch even a little lower. Then, 2 days before my closing, the rate at my lender took a huge dip to 4.875% (with no points and no early payment penalties)! I was beside myself. I called the bank to see if I could switch even though I'd already locked in. I was surprised to find out that for a $400 flipping fee, I could switch. The $400 would be made up in no time by the lower monthly payments. This switch also moved the closing back a week, but it didn't really matter because they still let us move in on time.

Now, I see that within that past 3-4 weeks, mortgage rates have risen drastically. They are currently 5.75% at my lender. On the day of our closing we were told that the 4.875% was only available for about 3 hours! I guess watching the rates for a year paid off. I was able to predict the drop at the end of 2007 that led me to an ideal time to lock in a rate.

Researching in this way could help you get a low rate as well.

When we were designing the floor plan for our new home, we decided to put a wood burning fireplace in the family room. We love the ambiance that a traditional wood burning fireplace gives, and our goal was not to use this fireplace as a primary heat source. It has recently become time to start looking at the fireplace choices, and I was surprised to see relatively few choices.

If you take a look at the Home Depot or Lowes websites, you will find that they don't offer a single wood burning fireplace. They have several wood burning stoves, but those are definitely more for heat than looks. They have several gas models available, but to us, gas just doesn't compare with a real wood burning fireplace.

So I started wondering, "Why aren't there more choices for wood burning fire places?" A little investigation leads me to believe that there are fewer options available because certain areas have enacted laws and/or bans regarding wood burning and the smoke that it produces. It seems like this process should be relatively carbon neutral because the carbon released through burning would be the same as if the tree just laid on the ground and decayed. So the issue appears to be smoke and smoke particles.

Newer wood burning stoves and even some of the newer wood burning fireplaces are EPA certified to only allow a certain amount of particles into the air. Unfortunately, an EPA certified fireplace has the look of a wood burning stove and not a traditional fireplace. Additionally, these EPA certified fireplaces are primarily used for a heat source. Therefore, they have thick doors to close and little viewing area.

So, should I feel guilty about choosing a standard wood burning fireplace? Our house will mostly be energy efficient (efficient windows, geothermal heating and cooling, etc.), so having a standard fireplace wouldn't be that bad. Besides, I will probably light less than 20 fires a year and they will most likely only last a few hours. If I'm building my fires correctly and using the right woods, it will minimize my smoke output.

You can't be green all the time, just minimize the amount of time that you can't.

I was looking for information about the Gerber Viper toilet since we are currently looking at plumbing fixtures for our new home. I found one plumber's website that has a video demonstration of the flushing power of the Viper.

I was surprised by how much this thing can handle. It's a 1.6 gallon per flush, gravity-fed toilet. There's no pressurized air to assist, and still, this thing handles everything they throw at it.

Aside from that, the video is kind of funny to watch all them flush all this stuff.

Check it out at:
Gerber Viper Toilet Demonstration

It was announced yesterday that the Federal Reserve Board approved a rate cut of half a percent. This move is aimed at stimulating the economy to avoid a recession. Apparently, the recent troubles in the housing and job markets have outweighed the threat of increasing inflation despite rising energy prices.

This cut in rates should be good news for the stock market. Yesterday, the Dow Jones rose over 200 points within the first 10 minutes of the announcement. Likewise, this should be good for anyone who is planning on purchasing a home in the near future. Mortgage interest rates are expected to follow suit and show begin lowering today.

So far, this is all working into my master plan. I've been predicting that interest rates would come down in the second half of the year. I also predicted that we'd see some decrease in gas prices after the relatively strong rises we saw in the first half of the year. If that happens too, I'll call myself clairvoyant.