Go Green to Save Green
Energy efficiency tax credits will boost your conscience and bank account
Ever thought about going green in your home? No, I'm not talking about painting the kitchen -- I'm talking eco-friendly updates. Going green will cut down your energy bills in the long run, and you can get a tax credit for energy-efficient home improvements right now.
Several big-ticket energy savers are eligible for the credit. To qualify, the product must meet or exceed the requirements of the 2000 International Energy Conservation Code.
While you won't get all your money back, you can get tax credits if you buy these products:
- $50 for purchasing an air-circulating fan
- $150 for installing a highly efficient furnace or boiler
- $200 for installing energy efficient windows
- $300 for purchasing a highly efficient central air conditioner, heat pump or water heater
- $150 for each qualified natural gas, propane, or oil furnace or hot water boiler
The total credit for each year cannot exceed $500, and no more than $200 can be used towards windows.
In addition, you can receive these larger credits:
- 30 percent, or up to $2,000, for the purchase of solar water-heating equipment or solar panels. You cannot use this credit if you use either product to heat a swimming pool or hot tub.
- 30 percent, or up to $1,000 per kilowatt, for the purchase of a fuel-cell power plant. The plant must generate at least 0.5 kilowatts of power.
How do I qualify?
For existing homes, 2007 was the last year to claim the credit. That means if you did not install the energy-efficient update before January 1, 2008, you're stuck footing the whole bill. You cannot claim improvements made in 2006 on your 2007 taxes.
If you're buying or building a brand new home, you can get the credit for purchases you make before January 1, 2009. However, the credits for energy-efficient windows, doors, insulation, roofs, heating and air conditioning, or nonsolar water heating were for existing homes only. If the home you're building is your principal residence, you qualify for the fuel cells credit. The credits for solar water heaters and solar panels can be used for a principal residence, rental unit or a second home.
Always consult your tax adviser. Read more about the energy efficiency tax credit on the IRS Web site.
Note: If you claim the energy efficiency tax credit because you made green home improvements, you'll need to subtract the money from the basis of your home when you sell.