Do You Qualify For Home Improvement Tax Credits?

As you do your taxes in the next few months, imagine for a moment that your tax burden is $1,500 less. Like that feeling?

That scenario could very well happen if you've taken advantage of the federal tax incentives now available for making your home more energy efficient. Haven't gotten around to upgrading your home yet? You should. Not only do you get tax breaks, but your home ends up more comfortable and more durable. Plus, any investments you make now will save you money on utilities for a long, long time.

So, what products qualify? And how do you do the math?
According to ENERGY STAR, there are currently two levels of tax credits.

1. The first one allows you to deduct 30% of what you spent on things like energy-saving windows, doors and insulation -- up to $1,500.

2. The second level includes big-ticket items like solar panels and allows 30% tax credit with no upper limit.

Let's look at a simulated example using the $1,500 limit:

Your federal taxes due for 2010: $2,000
What you spent on energy-efficient windows and doors: $5,000
30% of what you spent: $1,500
Revised taxes due: $500

Here are some of the energy-efficient items that qualify for a federal energy tax credit. Note that installation costs are not included with every item:





Central Air Conditioning (tax credit includes installation costs)
• Gas, Propane or Oil Hot Water Boiler (tax credit includes installation costs)
• Natural Gas, Propane or Oil Furnace (tax credit includes installation costs)
• Insulation (tax credit DOES NOT include installation costs)
• Roofs, Metal and Asphalt (tax credit DOES NOT include installation costs)
• Gas, Oil, or Propane Water Heater (tax credit includes installation costs)
• Electric Heat Pump Water Heater (tax credit includes installation costs)
• Windows, Doors and Skylights (tax credit DOES NOT include installation costs)
• Storm Windows and Doors (tax credit DOES NOT include installation costs)
The big-ticket items that give you 30% tax credit with no upper limit include

• Geothermal Heat Pumps (tax credit includes installation costs)
• Small Wind Turbines (tax credit includes installation costs)
• Solar Water Heaters (tax credit includes installation costs)
• Solar Panels (tax credit includes installation costs)


See the whole list here

You may be wondering: Can you roll over the tax credits to the next year in case you don't owe enough taxes to take full advantage of the credit? According to ENERGY STAR, the answer is, yes and no. With the $1,500 tax credit, you cannot roll it over. With the 30% tax credit with no upper limit, you can roll over unclaimed tax credits until 2016.

So make sure you take into account anything you've done to improve your home when you file your taxes this year. And remember, it's never too late to get started for next year's tax season -- it'll be here before you know it!