Interested in how you can qualify for the energy efficiency tax credits? It’s not nearly as hard as some people think. Read below to find answers to the top ten questions on these energy tax credits – and get started on thinking how they can benefit you.
Question #1: How do I apply for the tax credit?
To apply for the energy tax credit you have to file the IRS From 5695 when you file your taxes. Remember, the year in which you place your energy efficient product in service is the year in which you should claim it on your taxes.
So if you put an energy efficient product service in 2009, claim it on your 2009 taxes. If you’re planning to install something in 2010, claim it on your 2010 taxes (remember, the tax credits last through 2010).
Question #2: Are there any new Energy Star appliance tax credits?
There’s actually a rebate program that involves Energy Star appliances, but it’s being directed on a state-by-state basis. The recent stimulus bill unveiled by the Obama administration included $300 million for states to come up with consumer rebate programs for Energy Star qualified appliances. To find out about the rebates available in your state, contact your state government office.
Question #3: Can I get a tax credit for a new water heater?
Yes. You can get a tax credit for an electric heat pump water heater, a solar water heater, or a tankless water heater. However, you may not claim a tax credit for an electric tankless water heater or an electric storage tank water heater.
Question #4: Do I get $1500 for each energy efficient product I install?
No. The energy tax credit consists of a maximum $1500 claim that includes both 2009 and 2010. So regardless of the number of energy efficient changes you make, you can only claim a total of $1500 in tax credits.
Here’s another way to look at it: If you spend a total of $5,000 on energy efficient products or home improvements throughout 2009 and 2010, you’ll qualify for the maximum ($1500) tax credit.
Question #5: Exactly what are the available rebates and tax credits?
There are actually two different pots of money available for those who make energy efficient improvements to their homes. One is the energy tax credit, provided through the federal government as a credit to your income tax.
The other is a rebate program for Energy Star appliances that is being directed at the state level. You’ll have to contact your state to find out the specifics about your rebate program.
Question #6: Can I get a tax credit for installing central air?
Yes. Like other qualified purchases, you can claim 30% of the cost of your central air conditioner. Remember that your claim cannot exceed $1500.
Question #7: What about a tax credit for a gas, oil, or propane water heater?
If you install a gas, oil, or propane water heater you can claim 30% of the cost on your tax credit. This includes labor costs.
Question #8: Can I get a tax credit on a new furnace?
Yes, if you’re looking to improve home energy costs, both furnaces and boilers qualify for the energy tax credit. This means you can claim 30% of the cost up to a maximum of $1500.
Question #9: Does the tax credit include installation costs?
The tax credit does include installation costs, but only on specific items. These items are fuel cells, wind energy systems, geothermal heat pumps, solar panels, water heaters, biomass stoves, and HVAC systems.
You may not claim a tax credit on the installation costs for energy efficient windows, doors, roofs, or insulation.
Question #10: What type of house qualifies for a tax credit?
The energy efficient improvements eligible for a tax credit must be made to your primary residence. If you make improvements to a vacation home or rental home, you cannot claim the tax credit.
