Make your home more energy efficient for not just long-term savings, but short-term tax benefits.
Energy saving home improvements made between December 31, 2005 to Jan 1, 2008 will get you tax credits which are more beneficial than deductions as they represent a dollar-for-dollar reduction in your tax bill.
Here's what's available:
Energy-efficient improvements: The credits for this are limited to improvements on your primary home but cover a lot of things such as leaky windows.The credit is for 10 percent the cost of eligible improvements and has a lifetime upper limit of $500. There are also specified limits on specific improvements.
Simple moves like buying an energy-efficient air conditioner or installing more insulation can help you claim credit.
Making your property energy efficient by installing solar energy will also give you tax credits. But these have annual caps and will need to be extended beyond 2007 for continued benefits.
Installation of solar-powered hot water systems in even vacation homes is elegible for tax credits.
You can even carry over your unused credits.
To qualify for these, you need to meet the complicated definitions in the bill but fortunately, you can rely on the manufacturer to determine whether the product meets federal standards.
You need to consult with your tax preparer and figure out the tax credits your state offers.
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