You only have through December 31, 2010 to purchase energy efficient improvements for your home and qualify for a lucrative tax break. The maximum credit is equal to 30% of the first $5,000 spent on high-efficiency heat pumps, air conditioners, and water heaters, or energy-efficient windows, doors, insulation materials, and certain roofs. You can also claim the credit for certain types of asphalt roofs and stoves that burn biomass fuel.
Even if you claimed the $500 tax credit a few years back for energy efficient improvements made to your home, you can still claim the full $1,500 tax credit for 2009 and 2010 as long as you make $5,000 worth of qualified energy efficient expenditures during that two year period.
Please note that the new rules did increase the standards for an energy efficient purchase to qualify for this tax credit. Check out the products listed atwww.energystar.gov to see if the energy efficient purchases you made qualify for this tax credit.
Thinking about adding solar, wind, or geothermal capabilities to your home? If so, you should be aware that The American Recovery and Reinvestment Act of 2009 also improved the tax credit for purchases of solar electric property, solar water heating property, wind energy property and geothermal heat pump property. Under the prior rules, the tax credit you could claim for most of these items was capped at $2,000 per dwelling.
As of January 1, 2009, these limits no longer apply. Through 2016, you can take a tax credit equal to 30% of your expenditures for qualified solar, wind, or geothermal property. Plus, you can claim the credit even if you add this energy producing property to a home that is not your primary residence. According toIRS Notice 2009-41, “a qualifying dwelling unit is a dwelling unit that is located in the United States and is used as a residence by the taxpayer.”
Get Some Green for Going Green
To claim this tax credit, make sure to complete and attach aForm 5695 to your federal income tax return. Plenty of good information about this expiring tax break can be found on the instructions of the Form 5695 which begin on page 3 of the pdf file.