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Columns: Tax Talk
George Saenz, CPA   Expert: George Saenz, CPA
Tax Talk
Appliances probably don't qualify for energy tax credit
Tax Talk

Energy-efficient tax credit still available
 

Dear Tax Talk,
We just built a new home and bought new appliances. Will we be able to claim any tax credit for buying energy-saving appliances?
-- Sandra

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Dear Sandra,
The energy credit is alive and well at least through the end of 2007. The credit is available for new construction as well as energy-saving improvements to existing homes.

A tax credit can provide significant savings. It reduces the amount of income tax you have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a tax credit directly reduces the tax itself.

The maximum amount of homeowner credit for all improvements combined is $500 during 2006 and 2007. Solar energy and fuel-cell improvements have separate limitations.

Appliances in general do not qualify for the credit. Certain water heaters and heating, ventilation and air-conditioning systems do qualify. In addition, energy-efficient windows, doors, roofing and insulation qualify.

Within each category of improvement you have to meet certain energy-efficiency targets. The credit is a percentage of the cost of the improvement up to certain limits.

Energy Star provides a detailed list of what items qualify for the energy-savings credit. Use IRS Form 5695 to claim the credit on your 2007 income tax return.

Bankrate.com's corrections policy-- Posted: July 13, 2007
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