Tax Breaks for Home Renovations

Thinking of ways to lower your utility bill? Maybe you want to throw more insulation in the attic or install a more energy efficient AC unit. Here is some basic information on how to get a maximum tax credit of $500 for your good deeds...

1) Tax credits are available for many types of home improvements including adding insulation, replacement windows, and certain high efficiency heating and cooling equipment. The maximum amount of homeowner credit for all improvements combined is $500 during the two year period of the tax credit. This tax credit applies to improvements made to your primary residence from January 1, 2006 through December 31, 2007.

All ENERGY STAR labeled windows and skylights qualify for tax credit. For tax purposes, save your receipt and either the ENERGY STAR label from all your new windows OR the Manufacturer's Certification Statement. The tax credit is good for 10 percent of cost, up to $200 for all windows, skylights and storm windows.

Metal roofs also qualify for the tax credit. 10 percent of cost, up to $500. All ENERGY STAR labeled metal roofs qualify for the tax credit. Must be expected to last 5 years OR have a 2 year warranty. Installation costs are not included. Manufacturer's Certification Statement required.

For insulation to qualify, its primary purpose must be to insulate. (example: vapor retarders are covered, siding does not qualify). Must be expected to last 5 years OR have a 2 year warranty Installation costs are not included. Manufacturer's Certification Statement³ required.

2) Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems "placed in service" in 2006 and 2007. The tax credit is for 30 percent of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap.

At least half of the energy generated by the "qualifying property" must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling.The system must be certified by the Solar Rating and Certification Corporation (SRCC).

More info here...http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#2