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News Flash!
News Flash!
Going Green around the house isn't just stylish, it also can save you money at tax time.
From now until the end of 2007 the federal government is offering consumers tax credits if you purchase certified energy saving appliances and products such as doors, windows, insulation and more. The Energy Policy Act of 2005 allows for $2,000 in tax credits for green home improvements. Plus you can earn another $2,000 in tax credits just for putting in some sort of solar power... even a solar water heater counts. In addition to these, you can add in the numerous savings that some state and local governments, along with public and private utilities, are offering in the way rebates, discounts, grants and tax breaks.
Here's how it works. A tax credit can save you money by reducing the amount of income tax you have to pay. A tax credit directly reduces the tax amount you pay whereas a tax deduction reduces the amount of income subject to tax. Tax credits are available for many types of home improvements including adding insulation, replacement windows, and certain high efficiency heating and cooling equipment. This tax credit applies to improvements made to your primary residence from January 1, 2006 through December 31, 2007 and is available for many different types of home improvements including insulation, energy efficient windows and doors, and energy saving heating and cooling systems.
The improvements must be made between January 1, 2006 and December 31, 2007, with the exception of solar systems which Congress has extented the credit for until December 31, 2008. The improvements must be made in your full time main residence and have to be installed during the tax credit period. You will have to show that you will be using these green improvements for a minium of five years.
Installation costs for heating and cooling systems are covered under the tax credits but not for doors, windows, skylights, insulation or roofs. Not all manufacture brands qualify. In fact, the items you use must be certified by a third party as energy saving, such as Energy Star. Even then you should make sure your improvements meet the Secretary of Treasury's certification requirements.
Never Trust a salesperson to guarentee that your items will qualify for a tax credit. Do your own research through govenments sites and non-profit sites, not manufactures sites. Remember, sales people just want to sell you products and their information may be accurate but at the same time it may be scewed. There are a lot of companies who call themselves green when they aren't really green enough to qualify.
Always get a Maufactures Certification Statement. It is required for the tax credit. You will be using IRS form 5695. Your accountant should know about it...if not get a new accountant. For Qualified Products list contact Consortium for Energy Effiecent Products, Treasury Office, USGBC, or ask your accountant, he/she may have a list.
Always do your research first. Make sure that the products you use meet the IECC (International Energy Conservation Code) requirements.
