Looking for ways to make “green” home improvements and save money at the same time? The IRS is offering homeowners the opportunity to do just that.
Valerie RumboughFor 2009 and 2010, the IRS has expanded a tax credit from 10 percent to 30 percent of qualifying improvements, with a lifetime cap per taxpayer of $1,500. Any prior credits you may have claimed before 2009 for similar items do not reduce this credit.
Some of the improvements that qualify include insulation, exterior windows and doors, and central air conditioners, just to name a few. These improvements only qualify if made to existing homes. In addition, they must meet certain efficiency guidelines published by the IRS. Typically, the vendor you use to install these items can tell you if an item qualifies.
If you want to go “greener,” there is another credit available for installing state-of-the-art, energy-efficient systems in new or existing homes through 2016. A 30 percent tax credit is available for geothermal heat pumps, and some solar powered items. The credit applies to the cost of labor and installation as well as the cost of the equipment. Most of these credits apply to rental properties and second homes, as well as your personal residence. There is no cap on the amount of credit that can be claimed.
For more information on this credit, see IRS Form 5695, Residential Energy Efficient Property Credit, has been developed to assist taxpayers with claiming this credit. You can obtain this publication from the IRS Web site, www.irs.gov, or by calling your CPA or tax return preparer. Remember, a tax credit is a dollar-for-dollar reduction in the amount of tax you owe.
This is quite a big savings for now, and for future years through less energy use.
Rumbough, CPA, CFP, is chief operations officer with the Baptist Foundation of South Carolina. Contact her at (800) 723-7242. In accordance with IRS Circular 230, any U.S. federal tax advice contained in this communication is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code or (ii) promoting, marketing, or recommending to another party any transaction or matter addressed herein.