I read in Kiplinger's a few months ago about a tax break for window replacement. I am looking at replacing all of my windows and wonder if I should wait until 2006.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
I read in Kiplinger's a few months ago about a tax break for window replacement. I am looking at replacing all of my windows and wonder if I should wait until 2006.
Waiting until the New Year could save you some money.
The Energy Tax Act of 2005 gives homeowners tax breaks for making energy-efficient improvements after January 1. You'll be able to claim a 10% tax credit for the cost of buying and installing efficient new windows, doors, skylights and insulation. You can also claim a credit for installing certain efficient hot water heaters and central air conditioning systems and more. See the table below.
improvement
credit
Purchase and installation of energy-efficient windows, doors, skylights, insulation, metal roofs coated with heat-reducing pigments.
10% of cost up to $500 ($200 max. for window expenses)
Advanced main air-circulating fans
$50
Qualifying natural gas, propane or oil furnaces or boilers
$150
Qualifying electric or geothermal heat pumps
$300
Solar water heating equipment and installation (as long as it isn't used for swimming pools or hot tubs)
30% of cost, up to $2,000
Fuel cells to supply electricity
30% of costs, up to $500 for each 0.5 kilowatt of capacity
This tax law also improved the tax benefits for buying a hybrid car. Instead of the current $2,000 deduction, people who buy hybrid cars in 2006 will be able to take a tax credit, which lowers your tax bill dollar-for-dollar. The amount of the credit depends on the mileage figures for the 2006 models, but you'll probably get about a $2,350 credit for a Honda Civic, or $2,750 for a Toyota Prius.
But don't put off your purchases too long. Most of the credits come with expiration dates that range from 2007 for some of the home improvement items to 2014 for fuel cell cars.
