The Obama administration has created a new tax credit program as part of the American Recovery and Reinvestment Act of 2009 to help homeowners make energy-efficient improvements to their homes (the home in question must be the taxpayer's principal residence). The previous tax credit for energy-efficient home improvements was scheduled to end in 2009 and was capped at 10% or $500. This one is significantly better, but the energy efficiency requirements on some items have been increased.
-If you're improving an existing home, the tax credit is available for windows and doors, insulation, metal and asphalt roofs, HVAC (mainly air conditioners and furnaces), non-solar water heaters, and biomass stoves.
-The home improvement must be placed in service between January 1, 2009 and December 31, 2010. So if you're feeling gunshy about spending money right now, you have plenty of time to make the improvements. However, in a down economy, you'll probably have an easier time negotiating with contractors and getting work completed quickly, so that's something to keep in mind.
-The maximum total credit is $1500 and the maximum percentage is 30% of the cost. So if you want to take advantage of the entire credit, you'll need to spend $5,000, which means $3500 will still come out of your pocket in the end. If you spend $1500, you won't get a credit for $1500, you'll get a credit for $450, leaving $1050 of the cost as your responsibility.
-The credit amount doesn't have to all be applied toward one improvement. You can make a combination of improvements.
-The credit can be used toward installation costs for all items except windows, doors, insulation, and roofs.
-The item being used for the improvement must come with a Manufacturer's Certification Statement. Not all products with the Energy Star label qualify, so make sure to choose your purchase carefully and retain the certification statement for your tax records.
If you're having a new home built, the tax credit rules are a little different. You can read about those credits, and learn more about the credits for existing homes, at the Energy Star website.
Photo by Olga Dietrich
Easy Ways to Cut Your Electric Bill
Redeeming Recyclables for Cash
Our $500 Mistake: Pay Close Attention When Negotiating With Contractors
Paying Taxes with your Credit Card
Adventures in DIY Home Remodeling
Quotes on love