Tonight, our temperature is slated to drop into the 30s. In fact, it’s supposed to start doing that on a pretty regular basis, something I imagine my mom is thrilled about as she packs to come visit me for Thanksgiving. She just loves the cold (insert hysterical laughter here).
We live in a 19th century Victorian house in Philadelphia. It is not what one would call “energy efficient.” We have a number of old, single pane windows, an old heater and a pretty horrifying lack of insulation in the back room. It is, I tell myself, part of the “charm” of living in an old house.
Over the years, we’ve been fixing it up. New window panes here, new fangled electric thermostat there, new roof here, electric wires that don’t use the words “knob” and “tube” there… By the end of the year, we’ll probably make another improvement or two: one, so that we don’t freeze to death this winter and two, because of the availability of two energy tax credits through the end of this year.
- The Nonbusiness Energy Property Credit is available for taxpayers who invest in “energy-saving improvements.” It can be up to 30% of the cost of those improvements, to a maximum tax credit of $1,500 for 2009 and 2010 combined. In real dollars, that means that the credit offsets the first $5,000 of improvements like high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass. Labor is also included on those items. Labor is not included on certain other improvements like the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs, although the actual cost of the improvements is included.
- The Residential Energy Efficient Property Credit is available for taxpayers who are going green this year. Up to 30% of the costs of solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property is available as a credit with no cap on the amount of credit available. The cost of installation qualifies for the credit in most cases.
Remember these are credits, not deductions. You don’t have to itemize to claim them on your tax return – just use federal form 5695, Residential Energy Credits, to figure the credit. And credits, unlike deductions, actually reduce your tax due on a dollar for dollar basis. Trust me, you *like* tax credits.
Not all energy efficient improvements qualify for the credit. You’ll also need to provide documentation to substantiate your claims so read labels carefully. You can find out more about what qualifies – and what doesn’t – on the Energy Star web site.
