Save Energy, Cut Your Taxes
Tip It!Have you been thinking about improving the energy efficiency of your home? If so, then you might want to check into the available energy tax credits for homeowners. During 2006 and 2007, taxpayers can claim a credit of 10% for buying qualified energy efficient home improvements. The following items are potentially eligible for the tax credit:
- insulation systems that reduce heat loss/gain
- exterior windows (including skylights)
- exterior doors
- metal roofs (meeting applicable Energy Star requirements)
The maximum lifetime credit for these items is $500, and no more than $200 can come from windows.
There is also a credit for adding qualified solar panels, solar water heating equipment, or a fuel cell power plant to your home. Taxpayers are entitled to a credit of 20% of their investment in solar panels, up to a maximum credit of $2,000 and another, equivalent credit for a water heating system. However, neither of these can be used to heat a pool or hot tub. The credit for fuel cell power plants is 30%, and cannot exceed $500 per 0.5 kilowatts of capacity.
And keep in mind that we’re talking about tax credits here, and not tax deductions. So these amounts come straight off the top of your tax bill, as opposed to reducing it fractionally.
To qualify, these improvement have to have been placed in service sometime during 2006 or 2007.
[Source: IRS.gov]
Published on March 5th, 2007 - 4 Comments
Filed under: Energy, Taxes
About the author: Nickel is the founder and editor-in-chief of this site. He's a thirty-something family man who has been writing about personal finance since 2005, and guess what? He's on Twitter!
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March 5th, 2007 at 8:52 am
We replaced an innefficient door in our basement (which was made more innefficient by the huge hole some kids put in it) and more than doubled the insulation in our attic. I will definately be claiming my credits for those!
March 5th, 2007 at 1:36 pm
I had my roofer itemize my bill to show the additional money that I spent on reducing heat build-up in my attic. The IRS doesn’t require attaching it to your return, but you better have proof if you get audited.
March 5th, 2007 at 4:00 pm
I got in on this last year with insulation. I got eight rolls from home depot and got two $75 gift cards via rebates. After all of that, the extra 10% credit really pushed the price down.
April 5th, 2007 at 10:32 pm
While I hate thinking about taxes it is great there is some tax relief provided to encourage homeowners to take action in energy conservation!