The energy-efficiency tax credits and renewable-energy tax credits are better than tax deductions. The allowable credits aren’t just deductible expenses; they represent dollars subtracted directly from your tax bill. While the tax credit program includes illogical rules, the available tax credits can be significant.
If you want to claim a tax credit on your 2009 income tax return for energy-efficiency improvements to your home, you should get the improvements installed before the end of the year. There’s really no need to rush, however, since the tax credits will remain available until the end of 2010 — or, in some cases, 2016.
The energy-efficiency tax credits are available for air-sealing products, insulation, HVAC equipment, water heaters, windows, doors, and roofing. These tax credits were established on February 17, 2009 by the American Recovery and Reinvestment Act — President Obama’s stimulus bill.
The following rules apply to the energy-efficiency tax credits:
No tax credits are available for energy-efficiency improvements made in 2008. An earlier tax credit program (with different criteria) was available in 2006 and 2007; tax credits received for improvements in 2006 and 2007 are not counted towards the $1,500 limit on tax credits for 2009 and 2010 improvements.
The renewable-energy tax credits — credits for solar hot water systems, solar electric systems, ground-source heat pumps, wind turbines, and fuel cells — are separate from the energy-efficiency tax credits, and have different rules:
The Most Bang For Your Buck
If you’re interested in making your home more energy efficient, and maybe claiming a tax credit while you’re at it, where should you start?
For most homeowners, the first step should be a home energy audit. Ideally, this audit should be performed by an experienced RESNET-certified or BPI-certified home performance auditor equipped with a blower door. Unfortunately, no federal tax credits are available to cover any portion of the cost…