Go green, save green. Whether you’re a Democrat or a Republican, you can thank Congress for adding some tax incentives for homeowners to make energy-efficient home improvements. If you’re one of those people who’s always looking for last-minute tax tips, read on about the 2010 home improvements that can generate a tax credit of up to $1,500.
Go Green Now
Buy storm windows and doors that qualify for the Energy Star tax credit. (A storm door is an aluminum-framed door that fits over your existing wood entry door. Having the two layers traps air and makes your home way warmer. A storm window, of course, is the same thing for a window.) You have to check to make sure that the doors and windows have specific energy ratings—not everything you buy at the Home Depot is going to count, so look for an Energy Star label. Also, get out your screwdriver, because the doors and windows must be “placed in service”—that is, installed—by the end of 2010. You can claim this credit (30% of the cost of the windows and doors, up to $1,500) by filing form 5695 with your April taxes.
Faithful LearnVest readers know that here’s a separate incentive for you to buy energy-efficient appliances. It’s technically a rebate, and it doesn’t always run out at the end of 2010. Click here for a map of appliance rebates.
Go Green Later
You have until 2016 to get a federal tax credit on a solar water heater system. These basically come in two parts: a solar collector that you put up on the roof, and an insulated storage tank which houses the hot water. They’re still expensive—you’re probably looking at $3,000 to $4,000 or so for a residential system, depending on how fancy you want to go. However, the carbon footprint savings can be massive.
About.com notes that for the average family of four, running an electric water heater for a year is about the same carbon footprint as owning two cars. With that in mind, consider upgrading to solar technology. If you’re in a sunny state like California, the system should pay for itself in five to ten years, depending on your energy bills. (Although you can get them in states that you might not think are sunny, like Vermont—one of my favorite solar hot water FAQs is courtesy of the Renewable Energy Resource Center in Vermont.)
Even better, the tax credit is available for 30% of the cost of the system, including installation. Two things to remember: The system must be rated by the SRCC, an independent solar appliance rating agency, and this is only for systems that produce water for showering, dishwashing, and other basic home needs—you can’t get the tax credit for a swimming pool heater.