Save Energy & Cash
Posted on: July 06, 2007
The Energy Policy Act of 2005 lets homeowners claim up to $500 on their federal income taxes for qualified energy-saving improvements placed in service through December 31, 2008. Here are some tips to help clients cut costs while cashing in on tax credits:
Central air conditioning units that qualify for the credit must meet the highest tier standards set by the Consortium for Energy Efficiency (CEE). Note that this is higher than the Energy Star standard.
Upgrades such as insulation, replacement windows and sealing ducts—which retain cool air—can earn the credit if using qualifying products. Visit North American Insulation Manufacturing Association, US Dept of Energy/Efficiency and Renewable Energy, Efficient Windows Collaberative, and Energy Star for more information.
Fans for cooling (and heating) systems that consume no more than 2% of the system’s energy use qualify. The Gas Appliance Manufacturers Association marks such units with an italicized “e” in its Consumers’ Directory of Certified Efficiency Ratings.
Appliance manufacturers must certify that their equipment meets the necessary specifications. Clients should obtain a copy of this certification upon purchase and keep it on file in case the Internal Revenue Service has questions.
Also, the $500 credit applies to each improvement made over the two-year period, so if clients take a $350 credit the first year, they can still take a $150 credit in the second year. (The cap remains $500, however.)
To learn more, visit the Tax Incentives Assistance Project.
Contributed by Mitch Carpenter of American Home Mortgage.