Energy-Efficient Tax Credits

The deadline is looming for home owners looking to save money — and enjoy a significant tax credit — by making energy-efficient improvements to their home.

The stimulus legislation that President Obama signed soon after taking office providing energy-efficiency credits for up to 30 percent or $1,500 of the cost of certain energy upgrades expires at the end of this year. 

According to Energy Star, a joint program of the U.S. Environmental Protection Agency and the U.S. Department of Energy, a typical household spends about $2,000 a year on energy bills.  By incorporating Energy Star appliances and other energy-efficient components into your home, you can save about a third on your energy bill.  The expanded tax credit money available to home owners on top of these savings is icing on the cake!

“Time is running out for home owners to take advantage of these tax benefits. It’s a good idea to act now, before the winter sets in, to make changes in their homes that will not only benefit them immediately, but over the long term as well,” said Eric Borsting, a California home builder and chair of the National Association of Home Builders (NAHB) green building subcommittee.

What is included?

Tax credits are available at 30 percent of the cost of the materials, up to $1,500, until Dec. 31, 2010 (for existing homes only) for:

  • High-efficiency windows and doors
  • Insulation
  • Roofs (metal and asphalt)
  • HVAC (heating, ventilating and air-conditioning)
  • Water heaters (non-solar)
  • Biomass stoves

Tax credits are also available at 30 percent of the cost of the materials, with no upper limit through 2016 (for existing homes & new construction) for:

  • Geothermal heat pumps
  • Solar panels
  • Solar water heaters
  • Small wind energy systems
  • Fuel cells

Details on qualifying improvements are available at http://www.nahb.org/efficiencytaxcredit.

How to Claim the Credits

Home owners can claim the 25C and 25D credits on IRS Form 5695 when they prepare their income tax returns. Be sure to retain records that include:

  • Name and address of the manufacturer
  • Identification of the component including make and model
  • Climate zones for which the criteria are satisfied
  • Additional information for storm windows, if applicable
  • Manufacturer’s certification — a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit

This article is courtesy of the National Association of Home Builders

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