Tax software has made it easier than ever to do your own taxes, but be sure you are not missing any deductions. While you may not have bought a new home, many consumers are updating their existing homes and might have purchased energy-efficient equipment without even realizing it could benefit your bottom line come tax time.
[AD]Home improvements made during the tax years of 2006, 2007 and 2009 are eligible for the tax credit. According to the EnergyStar Web site, the energy credit does not apply for improvements made during 2008.
At your hardware store of choice, certain brands showcase a sticker informing the consumer that the product has the EnergyStar logo that meets the criteria. Common examples of purchases that would qualify for the tax credit would be:
- Exterior windows and doors
- Storm windows
- Skylights
- Metal roofs
- Insulation
- Central heating and air conditioning
- Geothermal heat pumps
- Hot water boilers
- Advanced main air circulating fans
- Biomass fuel stoves with a thermal efficiency rating of 75% or more
- Asphalt roofs with cooling granules
Expect to receive a tax credit of 10% of the purchase price of your product. According to the IRS, "To qualify, a component must meet or exceed the criteria established by the 2000 International Energy Conservation Code (including supplements) and must be installed in the taxpayer’s main home in the United States."
There are limits of course; the tax credit for home improvement purchases is limited to $500. The $500 limit applies to the total credit one can claim for all years combined. A maximum of $200 of your $500 total limit can be used for purchasing windows. For solar panels taxpayers are allowed one credit equal to 30% of the investment up to a maximum credit of $2,000, and another equivalent credit for buying a solar water heating system, neither of which can be used to heat a pool or tub though.
For more clarification log onto the IRS website and see Form 5695.
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