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#123 Using a reverse mortgage to fund installation of a solar roof



For many years now, the two of you have been environmentally conscious, participating in recycling services and bagging your own groceries in eco-friendly carriers. You each own a hybrid vehicle, with the plan to select an all-electric car for the next purchase. Retired two years ago, you’ve been focused on your home, and last year you put in a smart thermostat.

This year, with your home about to become mortgage-free, you are considering having a solar roof installed. To that end, you’ve been studying up on the increased tax credits for 2023 and reading up about the process itself. Needless to say, making a single upfront payment for the installation of solar roofing would result in the greatest overall savings, doing that would require cashing in investments, which would negatively affect your regular cash flow, even considering the tax break. A home equity line of credit could be a consideration.

You might consider “recycling” the equity you’ve built up in your home, tapping your housing wealth to make the home more eco-friendly. With the tax credit now raised to 30% of the cost, your net “cash flow” from investments will potentially increase without your needing to liquidate any of those assets. Set up as a Home Equity Conversion Mortgage or HECM, the reverse mortgage might allow for funding other needs that arise in later years. Meanwhile, the equity you have not used would grow at the same rate as the interest being charged on the portion you do use for installing the solar panels.

Using housing wealth can help reduce your taxes while reducing negative impact on the environment.