June 20, 2024

Fryer And Brown

Creating Your Dream Home

Home Energy Efficiency Improvement Tax Credits: Save Money on Taxes and Energy Bills

The American Recovery and Investment Act of 2009 provides a way for taxpayers to save on taxes and energy costs through incentives and rebates on solar, wind and geothermal residential energy home improvement projects.

Home Energy Efficiency Improvement Tax Credits are given to consumers who purchase and install eligible products, such as energy-efficient doors, windows, roofs, insulation, and heating and cooling equipment in existing homes. Home owners can claim tax credits amounting to 30{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931} of the cost, up to a maximum of $1500.

Eligible Products

A variety of energy-efficient products are eligible for a credit. To qualify, these improvements must be placed in service stating January 1, 2009 through December 31, 2010. You have to make sure your specific product is eligible. Products that qualify for tax credit include:

• Energy efficient doors and windows. Installations costs are not eligible for the tax credit, and other restrictions apply.
• Metal roofs, asphalt roofs and skylights.
• Water heaters, excluding those used for hot tubs and swimming pools. Restrictions for energy efficiency apply. Tax credit includes installation costs.
• Insulation (spray foam, blow-in cellulose, fiberglass, etc.). Installation cost is not covered and the insulation must meet IECC (International Energy Conservation Code) requirements.
• Central air conditioning and heating, including advanced air handlers, boilers and furnaces, air force heat pumps, etc. Tax credit includes installation costs.
• Biomass fuel stoves with thermal efficiency rating of at least 75{bc081577d937b036760250a838c458dd2cdabe6c805de7ee78ca03a8e3da3931}

Take note that not all Energy Star qualified products are eligible for a credit.

Benefits

These types of products help lower your energy bills. While the initial cost of the product or equipment may be high, you will be able to recoup your investment quickly from your savings on energy bills. Also, these improvements will increase the value of your home. This means your home will have a higher resale value.

If you qualify for a credit, your income tax liability will be reduced. Each qualified energy efficiency home improvement product that you install will contribute to the tax credits you can claim. Take note that the maximum you can claim is $1500.

How to apply for Home Energy Efficiency Improvement Tax Credits

You will have to claim the credits on your 2009 or 2010 taxes. To claim it for 2010, the product must be ready and available for use in 2010.

Use IRS Form 5695 to claim it for the year 2009 or 2010. You will need a certification of energy efficiency from the manufacturer. This is provided on the packaging or the manufacturer’s website. Be sure to keep a copy of the sales receipt and a receipt from your contractor, including a breakdown of materials and labor cost.