Tax Breaks

Tax Credits for Going Green

You may be able to write off some of the costs of energy-efficient home improvements.

I read your column about the tax credit for installing an energy-efficient central air-conditioning system. What other home improvements qualify for the tax break? And is this credit phased out at higher incomes, as many tax breaks are?

You can get a tax credit for making many other energy-efficient home improvements before December 31, 2010. You don’t have to itemize on your federal tax return to get the benefit, and there’s no income limit.

The credit is 30% of the cost of qualifying energy-efficient home improvements, up to a maximum credit of $1,500 for 2009 and 2010 combined. You can qualify for this tax break even if you claimed the credit for installing energy-efficient windows a few years ago. But if you claimed a credit on your 2009 tax return, you’ll need to subtract that amount from the $1,500 maximum to determine how much you can claim this year.

Improvements that qualify for the credit include energy-efficient windows, skylights and doors, and certain types of insulation and roofs (the installation costs for these items don’t count). The cost of purchasing -- and installing -- certain heat pumps, furnaces, water heaters, biomass stoves and central air-conditioning systems also qualify for the credit.

If you spend $5,000 or more on eligible improvements, you qualify for the maximum credit of $1,500.

You can also get a bigger tax break on the purchase and installation of other, major home improvements, such as geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind-energy systems, as long as no part of these systems is used to heat a swimming pool or hot tub. The credit -- worth 30% of the cost of such improvements -- has no maximum dollar amount, and you have until December 31, 2016, to place those items in service.

See www.energytaxincentives.org and the Environmental Protection Agency’s Energy Star Web site for details on the types of improvements that qualify for the credit.

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