Homeowners Can Save $1,500 on Your Tax Return

Posted on April 5, 2010. Filed under: Tax Tips | Tags: , , |


Before you file your 2009 tax returns, don’t forget to consider the 2009 tax credits for energy efficient home improvements.

The American Recovery and Reinvestment Act (Recovery Act), enacted earlier this year, expanded two home energy tax credits: the non-business energy property credit and the residential energy efficient property credit.

Non-business Energy Property Credit

You can claim a credit for 30% of the cost of energy efficient property improvements including high-efficiency heat pumps, air conditioners, water heaters, energy-efficient windows, skylights, doors, insulation materials, stoves and many roofs. You may be able to get up to an additional $1,500 back.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements; a homeowner can save as much as $1,500 on his or her 2009 federal income tax return. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Residential Energy Efficient Property Credit

Homeowners going “green” should also check out a second tax credit designed to spur investment in alternative energy equipment. The residential energy efficient property credit, equals 30% of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits. For that reason, homeowners should check the manufacturer’s tax credit certification statement before purchasing or installing any of these improvements. The certification statement can usually be found on the manufacturer’s website or with the product packaging. Normally, a homeowner can rely on this certification. The IRS cautions that the manufacturer’s certification is different from the Department of Energy’s Energy Star label, and not all Energy Star labeled products qualify for the tax credits.

Eligible homeowners can claim both of these credits when they file their 2009 federal income tax return. Because these are credits, not deductions, they increase a taxpayer’s refund or reduce the tax he or she owes. An eligible taxpayer can claim these credits, regardless of whether he or she itemizes deductions.

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