We still have a Christmas tax song in our heart. It's on to the second verse of The 12 Tax Tips of Christmas.
#2 Improve your home: It's getting cold out there. And if your doors and windows are drafty, it's getting cold in your house, too.
You can plug those household gaps with some help from Uncle Sam.
Back in 2005, a comprehensive energy bill was enacted that contained provisions that offered some tax breaks for folks who made energy efficient improvements to their homes. But for the most part, the benefits were not very much and the rules about what qualified and for how much were convoluted.
In February, the American Recovery and Reinvestment Act took care of that hassle.
Now if you make energy efficient improvements to your residence, you can claim a tax credit worth 30 percent of the cost of all qualifying home improvements, up to a maximum of $1,500.
The credit is available for qualifying energy saving home improvements made in 2009 or 2010.
Note that the $1,500 maximum applies over those two tax years. That means if your home improvements net you a $1,500 credit on your 2009 return, then you cannot claim additional tax credit for more upgrades in 2010.
Upgrades allowed under this provision include adding insulation, energy efficient exterior windows and energy-efficient heating and, if you want to wait a few months, air conditioning systems.
More complex, and expensive, energy operations, such as assorted solar, wind and geothermal systems, also offer a credit of 30 percent. But in these cases, there is no dollar cap. And for your home energy upgrade planning purposes, these improvements are tax credit eligible through 2016.
Uncle Sam's Energy Star Web site has details.
Related posts:
- The 12 Tax Tips of Christmas: #1 Sell Assets
- Blog Action Day: Climate Change
- Praising Pigovian taxes
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