Tax Credits
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Drifting
Joined: Feb 2002
Posts: 2,637
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Tax Credits
Energy conscious homeowners may want to take a look at a major new tax incentive from Uncle Sam. Under the Energy Tax Incentives Act of 2005, a taxpayer who makes qualifying energy saving improvements to his/her existing home will be able to claim a tax credit for part of the cost of the improvements. Tax credits are more valuable to taxpayers than deductions because they are subtracted dollar-for-dollar off the bottom line of your federal tax bill. Here is an overview of the new credit.
Under the new law, a taxpayer will be able to claim a lifetime credit of up to $500 for making qualifying energy saving improvements to his/her existing home. However, only $200 of this credit may be for qualifying window expenditures. Subject to the $500/$200 lifetime caps, the credit equals the sum of the amounts in two categories:
Don’t rush out to get those new windows quite yet. The credit doesn’t kick in until 2006. On the other hand, you won’t want to wait too long to take advantage of this tax break either, because it is scheduled to disappear after 2007.
Contact your accountant for more information.
Under the new law, a taxpayer will be able to claim a lifetime credit of up to $500 for making qualifying energy saving improvements to his/her existing home. However, only $200 of this credit may be for qualifying window expenditures. Subject to the $500/$200 lifetime caps, the credit equals the sum of the amounts in two categories:
(1) Envelope improvements. This encompasses building components such as insulation, new windows (including skylights) and doors, and certain roofing material. The credit may be claimed for 10% of the cost of such improvements. The component must be installed in or on a dwelling unit (including a manufactured home) located in the U.S. Also, the dwelling unit must be used by the taxpayer as his/her principal residence, so improvements to a second home or to a rental property wouldn’t qualify. Finally, the energy-conserving components will need to be "reasonably expected" to remain in use for at least five years and the taxpayer must be the original user of the components.
(2) Purchases of certain property. The credit for certain kinds of energy saving property is simply a set amount. For example, for an advanced main air circulating fan, up to $50 of the cost is credit-eligible. For a natural gas, propane, or oil furnace or hot water boiler, up to $150 of the cost is credit-eligible. For energy-efficient building property such as a heat pump, up to $300 is credit-eligible. Eligible expenses include labor costs for onsite preparation, assembly, and original installation of the property. Finally, the energy-saving property must be installed on or in connection with a dwelling unit located in the U.S. that is owned and used by the taxpayer as his/her principal residence, and the energy-saving property must be originally placed in service by the taxpayer.
(2) Purchases of certain property. The credit for certain kinds of energy saving property is simply a set amount. For example, for an advanced main air circulating fan, up to $50 of the cost is credit-eligible. For a natural gas, propane, or oil furnace or hot water boiler, up to $150 of the cost is credit-eligible. For energy-efficient building property such as a heat pump, up to $300 is credit-eligible. Eligible expenses include labor costs for onsite preparation, assembly, and original installation of the property. Finally, the energy-saving property must be installed on or in connection with a dwelling unit located in the U.S. that is owned and used by the taxpayer as his/her principal residence, and the energy-saving property must be originally placed in service by the taxpayer.
Contact your accountant for more information.
Three Wheelin'
Joined: Mar 2002
Posts: 1,649
Likes: 0
From: CA
Hmmm, I need new windows anyway. It would be nice to get some help with the cost.
Side note: has anyone ever had insulation injected into their outside walls? My house's outside walls are hollow. The inside is wallboard and the outside is black paper covered by chickenwire covered by stucco. My old apartment had similar construction and they found a company that drilled holes in the outside and injected insulation into the cavities. I wonder how much something like that costs.
Side note: has anyone ever had insulation injected into their outside walls? My house's outside walls are hollow. The inside is wallboard and the outside is black paper covered by chickenwire covered by stucco. My old apartment had similar construction and they found a company that drilled holes in the outside and injected insulation into the cavities. I wonder how much something like that costs.
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