Energy Tax Credits for Your Home

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Energy Tax Credits for Your Home

By The BIDaWIZ Team on September 10th, 2009 at 8:00 am

That’s right, you can get tax credits for having a green home. The first place to start is improving home insulation which also results in a lower energy bill. But, we’ll get to that later — here are the specifics on the home insulation tax credit.

How much can you claim?
You can claim 30% of the qualifying costs (i.e. insulation, energy efficient windows), up to $1,500. In other words, by purchasing $1,000 worth of loose-fill energy insulation, $300 could be claimed as a tax credit. Last year, the maximum credit amount was up to $500 and 10% of the costs.

Greater Insulation = Lower Energy Bill By ~10%
Not only will you be able to lower your tax bill but your actual heating bill will also be reduced. Energy star estimates that the average homeowner that insulates and seals their homes will be able to lower their annual heating & cooling costs by 20% which is equivalent to 10% of their total annual energy bill. In dollar terms, let’s say your average monthly energy bill is $200, your bill will be reduced by $20 each month or $240 a year.

What are the Qualifying Costs to Improve Energy Efficiency?
Adding Insulation
Energy Efficient Exterior Windows & Doors
Roofs (Metal & Asphalt)
Energy Efficient Heating & Air Conditioning Units
Water Heaters & Stoves
NOT the services for hiring a contractor

Make Sure The Home Improvements Are Energy Star Certified
Note that most of the items that you purchase to make the improvements will need to have an energy star certification to qualify for this energy credit. To see a complete listing refer to energy star.

How do I apply?
Fill out IRS Form 5965 when you submit your 2009 tax return. This is also claimed on line 52 of your 1040.

How Long is the Credit Good For?
The improvements must be placed into service during 2009 and 2010 to be claimed as a tax credit.