Tax Credits, gifts from our government!

How would you like to make your house more energy efficient AND have the government pay for some of the project costs through tax credits? If this interest you, pay attention. Right now the government has extended/implemented many tax credit programs that last through December 31, 2010. Today, I will touch on a few areas that will make substantial changes in your energy bill as well as being very wise decisions for the future of your home.

Insulation: Adding insulation is one of the easiest and most cost effective ways to reduce energy consumed in a home. Most insulation and products that reduce or eliminate air leaks qualify, just make sure they come with a manufactures certification statement usually found in the packaging. Be aware, however, that the insulation tax credit does not include labor costs.

Heating, Ventilating and Air Conditioning: Furnaces, boilers, heat pumps and central air conditions that meet the minimum requirements installed in 2009/2010 may qualify. You will be happy to know that labor costs for HVAC and Water Heaters are included.

Water Heaters: Water heaters account for 14% to 25% of the energy consumed in your home, so a new water heater is a great investment, especially if the government is willing to pay for it! Water heaters have an average life of 10-15 years. If yours is approaching the end of it life you should consider a tankless water heater or a newer version that qualifies for the tax credit program. Qualifying water heaters include gas, oil and propane water heaters (including tankless), electric heat pump water heaters and solar water heaters.

Windows and Doors: Whether it be one window or your whole house this is a very practical project to undertake. With the wide array of window options not only will this add efficiency to your home but could also add an aesthetic boost. If you can’t afford to do your entire house, start with the front and then work your way around. The tax credit does not include installation.

For all of the tax credits that I mentioned the government is willing to contribute 30% up to $1500 if installed in 2009/2010. The property will also need to be your primary residence, rental properties do not apply.

In order to claim these tax credits complete and file Form 5695 with your regular tax return. Although you will not have to submit certificates verifying the material you installed meets the energy requirements you will need to keep them on file.

A tax credit can be a great benefit, it reduces the amount owed to the IRS on a dollar for dollar basis. If your liability is reduced to zero with some tax credits being unused, the balance may be carried to the next years taxes. Please check with your tax advisor to see if these are feasible options for you.

To learn more about tax credits and materials that qualify please visit www.energystar.com.