The stimulus plan which Congress approved in February provides individuals with strong incentives for making ones home more energy efficient. By taking some easy steps in improving the sustainability of ones home the stimulus plan will assist in lowering ones taxes.
By performing certain energy-efficiency upgrades such as improvements in windows and insulation, one can receive substantial revenue in tax returns. This is because up to 30% of the total cost of the upgrades will be given back as credit, according to the stimulus plan. Thus, if one were to spend 3,000 dollars on the accepted type of windows, one could receive up to $900 as a return.
Not any upgrade is covered, only four kinds are covered. This includes upgrades in what is termed as ‘home-shell improvements’ like insulation, windows and sealing. The reason these improvements are included is because of their ability to make the home more sustainable by closing or improving leaks. With less warm or cool air escaping the residence, less energy needs to be spent in cooling or warming ones home. In addition, energy efficient heating and cooling, ventilating, and HVAC systems, are also covered. Also, geothermal renewable energy technology is also ‘eligible’; this would include heating pumps, solar water heating, small wind generators and photovoltaic systems. The last improvement may come as a surprise; however hybrid and diesel cars are also covered on the stimulus plan.
Another exciting thing to keep in mind is the fact that the credit is not fixed on improvements that one makes at this time, they include ‘future’ improvements. Any home-shell or HVAC improvements made by December 31, 2010 are included. Improvements in renewable energy made by December 31, 2016, are also approved.
Some upgrades which one may have made last year can also be included. For instance, renewable energy improvements such as geothermal heat pumps and solar panels are covered. Unfortunately, home-shell improvements made last year are not included. In order to gain credit for any renewable energy improvement made in 2008, one must fill out I.R.S. Form 5695.
What step should I take first?
Perhaps the wisest step to take first would be to improve the insulation of ones home. By doing this one could reduce ones heating and cooling costs by up to 20%. This step should include an energy audit, which would assist in figuring out how much can be saved by improving the insulation of ones home.
Do not rush into installing solar panels. After all, solar panels are expensive and if ones home is not insulated correctly, the benefit of solar panels would be wasted to some degree. However after taking the correct steps towards ‘greenifying’ ones home, solar panels should certainly be considered.
These measures are still very new and tax preparers may still be unaware of them. Thus, it would be wise to make sure ones improvements meet the correct criteria. This can be done by checking the packaging of particular products, or doing some research by looking through the manufacturers’ WebPages.
Here are some useful links in performing this endeavor:
- The Alliance’s Website: ase.org
- The Tax Incentives Assistance Project: energytaxincentives.org
- Energy Star (info on qualifying products): energystar.gov
Starry Night Light’s is a provider of Energy Star approved products, thus lighting fixtures bought from Starry Night Lights meet the criteria! Look through our merchandise and find the best fixture for your personal taste and receive tax credit in return! Who knew going green could put so much green back into your wallet!!!