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:
- The credits are available to homeowners.
- The credits apply to improvements made to an existing home; new homes are not eligible. The home must be the taxpayer’s primary residence, not a vacation home or rental property.
- The value of the credit is 30% of the cost of the installed materials. For some but not all categories of materials, a credit can also be claimed for 30% of the cost of the installation labor.
- The maximum tax credit available is $1,500 per homeowner; this cap is the combined total of all energy-efficiency tax credits claimed in 2009 and 2010. For example, if you claim a $1,000 credit for a furnace and a $500 credit for windows, you’ve maxed out your available credits.
- The credit is set to expire on December 21, 2010.
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…