Are you making or planning energy-saving improvements to your home this year? If so, it is important for you to know that the improvements must be installed by December 31st in order to claim the tax credit.
There is a special tax credit available for homeowners who upgrade the energy efficiency of their residence. The credit is the equivalent of 30% of the cost of the improvement, up to a maximum credit of $1,500. That means that the credit is available on the first $5,000 of improvements ($5,000 x 30% = $1,500 max credit). The maximum credit applies to 2009 and 2010 combined. So if you claimed $1,000 in 2009, for example, you would only have $500 of credit still available for you to claim in 2010. The credit is non- refundable, does not carry forward into subsequent years, and cannot be used against the alternative-minimum tax.
There are many ways in which to improve your home’s energy efficiency that qualify for the credit. You can install a high efficiency furnace, air conditioner or water heater. You can also install skylights, new outside doors or windows. Installing insulation qualifies. Even certain roofing materials will qualify for the credit. Be sure that the specific improvement that you are making will qualify before buying it.
So, if any of these improvements are on your near-term list, get them taken care of right away so that you can claim the credit as well. Make your holiday season nicer, as well as you local contractors, and then have the added bonus of fewer taxes next spring.