Education

Friday, September 25th, 2009

Energy Tax Credits

Hello from Olson Defendorf Custom Homes in Austin, TX.

We've had a lot of interest in the energy tax credits that started this year for improving your home. We will try to clear up what it all means to you.

The American Recovery and Reinvestment Act of 2009 includes many incentives to upgrade the energy efficiency of your home with a tax credit to offset the costs. There are basically two areas you can get the credit. There are energy improvements (windows, doors, HVAC, etc.) and renewable energy improvements (solar etc.)

Energy improvements include windows, doors, roof, HVAC, water heaters, etc. The credit is up to 30% of the cost of replacing these items with high efficiency products in the form of a tax credit ($1,500 maximum). All products must be installed by Dec 31, 2010. Here is a quick summary.

Windows and Doors - 30% of material cost - no labor
Roof - 30% of material cost - no labor
HVAC - 30% of materials and labor
Water heaters - 30% of materials and labor

The other area is for adding renewable energy systems and includes solar panels, wind turbines, geothermal heat pumps, solar water heaters, etc. There are a few differences with these including no cap on the credit earned, and they don't have to be installed until Dec 31, 2016. All of these earn a credit up to 30% of materials and labor, no cap.

Remember, this is a credit not a deduction so it directly reduces your tax bill by the amount earned. Make sure to keep your receipts and talk to your accountant. Also, there is not an income limit with any of these.

Also, in many cities like Austin, TX where we are located the local government offers more incentives as well, such as solar panel rebates.

Please see the link below for more detailed information.http://www.energystar.gov/index.cfm?c=tax_credits.tx_index