It’s that time of year when working professionals, homeowners, and everyone in between start focusing on various tax deductions and what tax write-offs are available to save you the most money possible.
If you haven’t filed your taxes yet and you’ve made the savvy investment of transforming your home or condo into a modern, eco-friendly residence, there are a variety of 2011 energy credits that will reduce the amount you’ll pay in year-ending taxes. Although this year’s benefits fail to meet the 2009 and 2010 tax credits that were in compliance with the American Recovery & Reinvestment Act as a way to help boost the economic recovery, plenty of money can still be saved despite the changes made in 2011.
According to Energy Star, the following Federal Tax Credits are available to consumers who updated their homes this past year to feature energy efficiency products:
1) Homeowners who have installed Energy Star windows and doors can receive a tax credit that covers 10% of the purchase price, with the credit for doors having a ceiling of $500 and the credit for windows having a ceiling of $200.
2) The Installation of non-solar water heaters meeting various energy requirements has a maximum tax credit of $300.
3) Energy Star air-conditioning-$300 tax credit; Energy Star Furnace (including the following: natural gas, propane, oil, & hot-water)-$150 tax credit with efficiency requirement set to 95%.
4) Energy efficient roofing & insulation: the installation of roofing products that satisfy Energy Star requirements qualify for a tax benefit of 10% the purchase price or installation fee, with the maximum benefit reaching $500. Similarly, the installation or upgrading to energy-efficient insulation will qualify for a 10% of the purchase or installation cost, with the maximum benefit reaching $500.
5) Purchasing and installing a biomass stove can also provide a tax incentive to homeowners. All stoves using biomass fuels to heat your home or condo qualify for a $300 tax break, providing the stove produces a thermal energy efficiency rating of 75% or better.
In addition, several significant Energy Tax credits will remain active through 2016. These larger projects include the installation of geothermal heat pumps, solar-energy systems, small wind turbines, and fuel cells. With the exception of a fuel cell installation, which has a $500 maximum tax credit, each of these upgrades will provide homeowners a 30% tax credit with no maximum limit for the purchase cost. So if the savings from tax breaks isn’t enough motivation to upgrade your home to Eco-friendly status, consider the money you’ll save each month in utility costs. On average, an efficient water heater will cost between 10 and 20% less to operate than a typical, outdated heater, while other upgrades to your dishwasher or laundry units can save you up to 1000 gallons of water a year. Not a bad investment, right? In close, I wish you happy savings and good luck throughout this year’s ongoing tax season!