Thinking of building a new home, or replacing your old appliances, heating/cooling system, windows, or roof? Take advantage of new tax credits for energy efficient appliances and construction! Thanks to The Energy Policy Act of 2005 (EPACT), making your home more efficient may not only save you money on bills, reduce your impact on the environment, and increase the value of your home, it can cut your tax bill.
According to the US Department of Energy, “Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in the home can receive a tax credit of up to $500 beginning in January 2006.
The EPACT also provides a credit equal to 30% of qualifying expenditures for purchase for qualified photovoltaic property and for solar water heating property used exclusively for purposes other than heating swimming pools and hot tubs. The credit shall not exceed $2000.
Improvements must be installed in or on the taxpayer’s principal residence in the United States. Home improvement tax credits apply for improvements made between January 1, 2006 and December 31, 2007.
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Beginning in tax year 2006, consumers will be able to itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.”
To read more about tax credits for energy efficient home improvements and new home construction (as well as for energy efficient vehicles), visit Energy Star’s website.