I noticed this item on Suze Orman’s website about tax credits available to homeowners who green their homes: making upgrades such as adding insulation, going solar, and putting on a metal roof. Thought you might find it of interest. KB
Green Tax Savings: $500 Energy Tax Credits for Upgrade to Your Primary Residence
Certain eco-friendly upgrades to your home can qualify for federal tax credits through the end of this year. A credit is much more valuable to you than a standard tax deduction. A credit is a dollar for dollar reduction in your tax bill. A deduction’s value is based on your marginal tax bracket. For example, a $500 tax credit reduces your taxable income by $500. A $500 tax deduction for someone in the highest income tax bracket of 35% is only worth $175 ($500 x .35)
The maximum lifetime energy credit you can claim for upgrades to your primary residence is $500 total. Among the energy-efficient upgrades that qualify for the credit are:
- New windows, storm windows, sky lights: credit on 10% of the cost up to $200 total for all windows.
- New Exterior doors: credit on 10% of the cost up to $500.
- Metal roofs: 10% of the cost up to $500.
- Insulation. Credit on 10% of the cost up to $500.
- Central air/heating: $300 credit.
- New Furnace: $150.
- Geo-Thermal Heat Pump: $300.
- New Water Heater: $300
You must complete IRS Form 5695 to claim a Residential Energy Credit. To access the form click here.
NOTE TO NEW HOME BUILDERS:
If you are building a new home, you do not qualify for the tax credits for windows, doors, insulation, roofs or HVAC & non-solar water heaters. However, the tax credit for photovoltaics, solar water heating, and fuel cells is available for homeowners building new homes.
Other Tax Credits Beyond the $500 Home Improvement Cap
- Efficient Cars Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. These credits are available for vehicles placed in service after 12-31-05 and purchased on or before 12-31-10. Click here for more information on the eligible vehicles and the credit amount.
- Solar Energy Systems Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems “placed in service” from January 1, 2006 through December 31, 2008. The tax credit is for 30% of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap.
- Fuel Cells There is a consumer tax credit of up to 30% of the cost (up to $500 per 0.5 kW of capacity maximum) for installing a “qualified” fuel cell and microturbine systems. The credits are available for systems “placed in service” from January 1, 2006 through December 31, 2008. This credit is not limited to the $500 home improvement cap.