Cost-effective equipment are generating buzz because of an IRS announcement.
The nation’s tax code is as convoluted as before. In an effort to put forward responsible and efficient energy use in our homes, the Internal Revenue Service has instituted tax credits for residential energy improvements.
The Emergency Economic Stabilization Act of 2008 was signed to help the country recover from the current recessionary economy. It establishes tax credits for energy-efficient home improvements. To qualify, homeowners must undertake energy-efficient improvements in their homes and remain using the equipment for at least half a decade. Improvements have to be made this year as those assumed in 2008 will not be covered. Homeowners can receive tax credits equivalent to at least 10 percent. That would range from $200 to $2,000. Homeowners can opt to install storm windows that help reduce air movement through present windows or a small solar electric system that reduce monthly electric bills. Even wind energy and geothermal heat pumps are included.
According to ENERGY STAR, a joint energy-conservation program of the U.S. Environmental Protection Agency and the U.S. Department of Energy, among the other products that can be covered by the bill include exterior windows and skylights, exterior and storm doors, metal and asphalt roofs, central air conditioning units, air source heat pumps, gas, oil, propane or hot water boiler or heater, advanced main air circulating fan, electric heat pump water heater, biomass stove, solar water heater, photovoltaic systems and fuel cells. Central A/Cs have a $300 credit while fuel cells’ benefit can be up to $1,500. Swimming pool and hot tub modifications are not included however.
Before homeowners fill out their Form 5695, they must remember two more things. First, they must reduce the cost basis of their homes by the amount of credit allowed. The original purchase price, selling costs, and home improvement values must be deducted by depreciation to compute for the cost basis. This figure will then be lessened by the credits allowed by the IRS. Second, homeowners must keep their receipts and manufacturer certifications of their products. Lost documents may foil their prospects of pocketing that $500 for another home project.