Energy Efficient Products (doors, windows, etc.)
In tax years 2006 and 2007 there were several tax credits available to individual taxpayers for investing in energy efficient products for their home. While no such credits were available in 2008, a recent tax law provides for tax credits on qualified items placed in service in existing homes in 2009 and 2010. Examples of items which may qualify are exterior doors, windows, central air & heat units, hot water heaters, heat pumps, skylights, insulation, main air circulating fans and certain types of roofs. In most cases there are energy efficiency ratings on the items which must meet or exceed certain levels to qualify for the tax credit. A complete list of items and their rating thresholds can be viewed at www.EnergyStar.gov. Installation costs may be included when computing the credit for some items (a/c & heat units, hot water heaters, etc.) but not others (doors, windows, insulation and roofs).

The maximum credit previously allowed (2006/2007) was $ 500 but that amount has been raised to as high as $ 1,500 (2009 & 2010 combined) under the new rules. These tax credits are non-refundable, meaning they can be used to reduce your federal income tax but not below zero. For example, if your unadjusted income tax is $ 800 and your tax credits amount to $ 1,000 the tax is reduced to zero and you ‘lose’ the $ 200 difference.

Note that these credits apply only to improvements to an individual taxpayer’s primary residence and not to rental property.

Renewable Energy Systems
Tax credits are also available for larger, more complex renewable energy systems (i.e. solar or wind) placed in service through December 31, 2016. The rules for these credits are complicated and we encourage you to contact our office for additional information.

If you are planning to install energy efficient products or systems please give us a call or email us so we can help you maximize your tax savings.