Extra credit for home improvements

 

Here’s how it works: folks upgrading insulation, windows, doors, roofing, HVAC systems, biomass stoves, and nonsolar water heaters at existing homes can receive a tax credit for 30 percent of the purchase price of the product in question. The aggregated maximum credit allowed is $1,500 and the items must be installed at the buyer’s primary residence. The products must be purchased between Jan, 1, 2009, and Dec. 31, 2010. And for most of these home improvements, installation costs are not covered by the tax credit since DIY installation jobs are a possibility. 

 

So what exactly qualifies? Check out this EnergyStar database.

 

For big-tickets items like solar water heaters, photovoltaic panels, geothermal heat pumps, fuel cells, and wind-energy systems, the 30 percent of purchase price rule still applies although there is no $1,500 cap and purchases can be claimed through 2016. Purchases (excluding the fuel cells) can be used at vacation homes, secondary residences, and homes under construction to qualify. Additionally, the installation costs for these more spendy improvements are eligible for tax credits.

 

Confused? The guidelines are pretty comprehensive so if in doubt, read them carefully. But as a rule of thumb, remember that less expensive, potentially DIY projects are capped at $1,500 no matter how much you buy or how much you spend; with more expensive, involved projects, the sky’s the limit in terms of how much you can write off at the end of the fiscal year.

 

Does the thought of being able to hold on to a chunk of change that you might owe the IRS at the end of the fiscal year motivate you to replace those drafty windows, re-insulate the attic, or even invest in a solar water heater?