Making energy efficient improvements to your home will do more than reduce your energy costs - they'll also reduce your tax bill.
Making energy efficient improvements to your home will do more than reduce your energy costs – they’ll also reduce your tax bill.
The tax credit for energy-efficient windows or doors, air conditioners or furnaces, or other energy-saving improvements disappeared in 2008, but returned for 2009 and 2010 – at an even higher value. This is one case where procrastination paid off.
Under the American Recovery and Reinvestment Act of 2009, homeowners who made the improvements are eligible for a credit equal to 30 percent of the cost, up to a maximum credit of $1,500.
To get the maximum credit, a taxpayer would have to pay $5,000 on energy efficiency improvements. The previous maximum had been $500. The good news for homeowners is that they can claim the new credit even if they had taken the old one.
- WWU cancels classes Tuesday after racial threats on social media
- Seahawks re-sign Bryce Brown in Marshawn Lynch’s absence
- Report: Seahawks’ Marshawn Lynch has surgery Wednesday, could be back by late December
- Like Marshawn Lynch, Seahawks’ Thomas Rawls craves contact
- Seahawks ramblings: What got Cary Williams benched?
Most Read Stories
“You get a clean start with this one,” said Mark Luscombe, principal analyst for CCH’s tax and accounting group.
To qualify, the improvements must have been made during 2009 – or 2010 if you’re going to claim them the following year. There is no income limit for the credit, and limits on individual items are gone. That means, for example, you can claim the full credit for windows, Luscombe said.
But there’s a catch. “Homeowners should be aware that the standards in the new law are higher than the standards for the credit that was available in 2007,” the Internal Revenue Service said. The IRS cautioned that not all products that carry the Energy Department’s Energy Star label qualify.
So how do you know if the furnace or hot water heater you purchased is eligible?
It’s up to the manufacturer to certify that the product qualifies. The IRS recommends that taxpayers keep a copy of the certification statement.
Homeowners who choose alternative energy could be in for a bigger tax credit.
There’s a 30 percent tax credit with no maximum for homeowners who install solar water heaters, geothermal heat pumps or small wind turbines. The credit also applies to site preparation and installation.
If you want to claim the credits, you’ll have to file Form 5695.
The tax credits for energy efficient home improvements are in addition to those for purchasing certain hybrid or alternative energy vehicles. The credit begins phasing out after the manufacturer sells 60,000 hybrids.
For 2009 model year cars, manufacturers that had hybrids still eligible for the credit are Cadillac, Chevrolet, Chrysler, Dodge, Ford, GMC, Mazda, Mercury, Nissan and Saturn. For the 2010 model year, the list includes hybrids manufactured by Cadillac, Chevrolet, Ford, GMC, Mercury, Mercedes-Benz and Nissan.
There are new tax credits for plug-in electric vehicles.
The credits range from $2,500 to $15,000, depending on the kind of vehicle, its weight and its battery.
On the Net:
Hybrid models eligible for credits: