Tax Tip: Home-Improvement Tax Credits| Tip of the Week | December 8, 2010 | No. 20
As the end of the year approaches, so does the end to some tax credits for energy-saving home-improvements. If you plan to take advantage of some of those credits, you will need to act fast. All improvements must be in place and the equipment in service by December 31, 2010 to qualify.
The tax credit covers installing certain wood or pellet stoves; energy-efficient furnaces, water heaters and air-conditioning systems; windows and doors; and wall and ceiling insulation. The tax credit covers 30% of the purchase costs up to a maximum $1,500 for the combined 2009 and 2010 tax years. Don’t forget to save the manufacturer’s certificate that states the equipment or service is eligible under the program. If you cannot place your hands on it, the certificates can also be found on the website of the manufacturer.
The improvements qualify for an existing home that is your primary residence. Vacation homes, rentals and new construction are not eligible for the credit.
The cost of installation is covered for installing heating and air-conditioning systems, water heaters and biomass stoves.
In addition, the cost of energy-efficient windows and skylights, energy-efficient doors and qualifying insulation also qualify for the credit, though the costs of installing these items does not count.
Appliances do not qualify for the tax credit, but appliances carrying the Energy Star seal will help reduce your energy bill. Many states and local utilities are offering direct rebates that allow you to take the rebate at the time of purchase. Check http://www.energysavers.gov to see the details of the Energy Savers program in your state.
Tax credits that are not going to expire this year are the tax incentives for rooftop solar-power systems, small residential wind turbines and geothermal pump systems. The tax incentive covers 30% of all costs with installation included and no upper limit. These credits are good on both existing principal residences, new construction and second homes. Rentals do not qualify. Another plus is that they don’t expire until 2016.
Questions or Comments?
Mark Vitek, CPA/PFS, CFP®
…until next week.