Tax Talk With Jim — The New Energy Tax Credit
Homeowners may be able to take advantage of the new energy tax credit by purchasing an energy efficient product. The manufacturer of the product must provide a certification that it qualifies for the energy credit. The homeowner is eligible for the credit if the energy efficient product is installed on or before December 31st in the homeowner’s principal residence. The only cost that qualifies for the credit is the actual cost of the product itself. Installation costs, including on-site preparation and assembly, do not qualify for the energy tax credit.
The energy credit is available only for the tax years 2006 and 2007, and the total credit for both years combined is $500.00.
Some energy efficient items that you might consider purchasing to take advantage of this credit include water heaters, heat pumps, central air conditioners and furnaces. In calculating the energy tax credit, taxpayers can also claim ten percent (10%) of the cost of any of the following qualified energy efficient improvements, such as insulation, exterior windows or doors.
Remember that unlike a tax deduction, the amount of a tax credit is subtracted directly from your tax bill and could result in substantial savings. For additional details, contact me at 888-534-6016.