If you make certain types of energy efficient improvements to your primary home in 2007, you may be able to apply for tax credits to lower your income tax requirements or increase your income tax return for 2007.
The Energy Policy Act of 2005 and its amendments encourage homeowners and renters to install energy efficient home improvements in three major categories; Residential building envelope improvements; Residential heating system improvements, and; Solar energy system additions.
If you qualify for building envelope improvements, you may be able to take a tax credit of 10% of the cost of your “nonbusiness energy property credit” improvements up to a total of $500. The materials referred to in the IRS general instructions for Form 5695 must be new and permanently installed to last at least five years. These improvements can include insulation materials, exterior windows, exterior doors and storm doors and some metal roofing materials. Labor costs for these improvements eligible for the tax credit.
Heating system improvements or “Residential energy property costs” include certain electric heat pumps, ground source or geothermal heat pumps and other space conditioning equipment. Labor costs are eligible for this tax credit which has the same tax credit eligibility of 10% up to a maximum of $500.
Solar energy tax credits are referred to as the “ Residential Energy Efficient Property Credit”. This credit is limited to 30% of your costs including labor up to a maximum credit of $2,000 for qualifying photovoltaic and solar water heating systems.
This article is not a tax consultant article. To make sure these credits apply to you, talk to your tax consultant, the Internal Revenue Service (IRS), or refer to IRS Form 5695. The Energy Star website also has more information.
Eligible improvements must be in place by December 31, 2007 and meet other requirements to qualify, so make sure you check it out before buying your improvements.
© Mark Daily, 2007
Monday, September 3, 2007
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