Home Energy Credits

Today TaxMama hears from several people, who say, “I do hope we can still get energy credits for the various improvements we made? We were counting on that! “

Dear Friends,

Thanks to all of you for asking – and the Tax Dude, Neil Johnson, for pointing that out.

Yes, there are a whole array of credits available to homeowners who plan out their improvement programs – as in, “in advance”. You’ll need to gather the paperwork from the builders or contractors at the time they install your improvements – or from the building supply company where you buy the components you install yourself.

In fact, I know of several businesses in Southern California whose entire sales pitch rests on the fact that the improvements they do will cost practically nothing once you take into account the IRS tax credits and the State of California tax credits.

Use IRS Form 5695 Residential Energy Credits.
http://www.irs.gov/pub/irs-pdf/f5695.pdf

Here are a list of the codes for the various eligible improvements.
http://www.irs.gov/taxpros/providers/article/0,,id=167096,00.html

For instance, you can get a 10% credit for installing the following items:
·Insulation systems that reduce heat loss/gain
·Exterior windows (including skylights)
·Exterior doors
·Metal roofs (meeting applicable Energy Star requirements).

You can get a credit of up to $500 (for all taxable years) for these things:
·$50 for each advanced main air circulating fan
·$150 for each qualified natural gas, propane, or oil furnace or hot water boiler
·$300 for each item of qualified energy efficient property.
There is a limit of $200 for all energy efficient windows

Solar energy systems will net you 30% of the cost, up to $2,000 and another $2,000 for solar water heating systems – just as long as none of the system is used to heat a hot tub or a pool. (Sheesh, that let’s California out!)
And if you add fuel cell power plants on your property, you can score up to $500 for each .5 kilowatt of capacity.

The only caveat, for now, is that all the energy credits expire at the end of 2007. So do it now!

And remember, you’ll find answers to lots of information about home energy credits and other tax information, free. Where? At TaxMama.com

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