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.