Investing in home improvements now will pay off for a long time to come. Besides the decrease in energy bills, tax credits will help pay for the new products. Some local utility companies also offer energy rebates for becoming more energy efficient.
Replacing inefficient windows and doors, heating and cooling equipment and insulation can decrease energy bills and make a home more comfortable. With the federal tax credits and utility company energy rebates, the benefits go beyond lower utility bills. A tax credit is a dollar-for-dollar reduction in what the taxpayer owes in federal taxes.
The Stimulus Bill (American Recovery and Reinvestment Act of 2009) made significant changes to energy efficiency tax credits. Visit Energy Star for a list of improvements and specific products that qualify for the tax credit. Some general statements can be made about the tax credits:
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They are available at 30 percent of the cost, up to $1,500 for property placed in service in 2009 and 2010 – for existing homes – for windows and doors, insulation, roofs, HVAC, water heaters and biomass stoves.
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They are available at 30 percent of the cost, with no upper limit through 2016 – in existing and new construction – for geothermal heat pumps, solar panels, solar water heaters, small wind energy systems and fuel cells placed in service.
But there are more specifics to keep in mind before purchasing products, if homeowners are counting on the tax credit. Some products, like gas furnaces, must be a specific make and model to qualify for the tax credit. Installation of some products is covered under the credit, but not all.
To receive the credit, taxpayers must complete a 2009 IRS Form 5695 (which will be available late in 2009). It is recommended that you keep the product receipt and the Manufacturer's Certification Statement, a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit, with other tax records. The tax credit is worth the time spent researching the specifics and completing the paperwork. Combined with potential energy company rebates, the return on this investment will be noticed for a very long time.
yearns/bmr
8/10/2009