Still looking for ways to lower your taxes? Greening your home means you can get more greenbacks in return. The stimulus plan approved by Congress in February offers tax credits for making your home more energy efficient. Read more from the New York Times…
How can the new tax law make our homes greener?
Uncle Sam is offering up to $1,500 in tax credit for energy-efficiency upgrades like new insulation and windows. The credits are worth 30 percent of the total cost for the upgrades. For example, if you spent $3,000 on eligible windows, you can get back $900.
What exactly is covered? Can I get money back for weather stripping?
Yes. There are four types of upgrades that are covered. The first batch are home-shell improvements like insulation, windows and sealing. These are designed to make the home tighter and close up leaks. The next batch are home heating, ventilating and air-conditioning, or HVAC. This includes efficient air-conditioners and furnaces. A third batch is renewable energy technology like geothermal heat pumps, solar water heating, small wind generators and photovoltaic systems. The last batch — and perhaps the most popular — are hybrid and diesel cars.
Are the credits limited to green improvements that we make right away?
No, the credits for the home shell and HVAC are available if you make these investments anytime before Dec. 31, 2010. Investments in renewal energy systems are eligible for credit until Dec. 31, 2016.
How about upgrades that were made last year?
There are some tax credits available, but they are only for renewable energy technologies like geothermal heat pumps and solar panels, not for things like windows, doors, insulation and HVAC. To claim credit for any investments made in 2008, fill out I.R.S. Form 5695. That same form will be updated in early 2010 to reflect the new changes.
What’s the best way to use these tax credits? Should I start shopping for a new air-conditioner?
As a general rule of thumb, the first thing is to seal and insulate your house, which can reduce your heating and cooling bill by about 20 percent. But what will make the biggest impact is specific to each home, so get an energy audit. Check the Web site of your local utility or state energy office, which sometimes offer an audit for free or for a nominal fee.
How about solar cells and wind generators? The new tax law gives an additional $2,000 for installing these renewable energy systems. Besides, aren’t these greener and sexier than storm windows?
A lot of people think that, but it only makes sense to install renewable energy technology if you’ve already made the home very energy efficient. If you live in a leaky home that wastes a lot of energy, installing solar energy panels doesn’t make sense. Also, solar panels cost a lot more than storm windows.
Tax preparers might not know about these credits. Where can people go for more information?
Products need to meet certain criteria to qualify, so it’s a good idea to do some research. Ask your retailer, check product packaging, or try manufacturers’ Web sites. The Alliance’s Web site, ase.org, and the site of our partners at the Tax Incentives Assistance Project, energytaxincentives.org, have information and links to I.R.S. forms. Energy Star (energystar.gov) also provides details on qualifying products and estimated savings.
Should people be looking for less obvious things? For example, can homeowners file for a new wood-burning stove?
The new law does cover any stove with a thermal efficiency of 75 percent or more that uses a “biomass fuel,” which means anything from crops to wood. So, yes, a very efficient wood stove is covered. But the most important thing still is to make sure your house is insulated and sealed. It may not be sexy, but at the end of the day, it’s what puts more money in your pocketbook.
To read the full New York Times article, please click here.