Dear Tax Talk,
Can I get a tax credit for making my home more energy efficient, or is that gone?
-- Ginger
Dear Ginger,
If you missed out on the earlier tax credits for energy-efficient improvements, they have been reintroduced for 2009 and 2010. The maximum total amount that can be claimed for all products placed in service in 2009 and 2010 for most home improvements is $1,500.
These tax credits are available for a number of products at the highest efficiency levels, which typically cost much more than standard products. Higher credits that run through 2016 are available for some more exotic improvements such as geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind energy systems.
However, doors, windows, roofing, insulation, water heaters, and heating and air conditioning systems will be the typical products on which you can claim the credit. Not all products will qualify for the credits. For example, an energy-efficient electric water heater does not qualify.
Energy Star provides a table of items that will qualify for the income tax credits. You can claim the credit for improvements to your principal residence in the U.S. Second homes do not qualify except for the more exotic improvements. Use IRS Form 5695 when it's released to claim the credit on your 2009 or 2010 tax return, depending on the date of installation.
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To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. federal tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein. Taxpayers should seek professional advice based on their particular circumstances.
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