Seeing Green: So it's established, the IRS only sees one color. And that's green. But the “green” of money is not the only green they're seeing now. They've jumped on the popular “going green” bandwagon promoting ecological consciousness. The IRS now offers “Energy Efficiency” and “Renewable Energy” Tax Credits. This gives them good PR and gives you some amazing Tax Breaks that can save you over $10,000 in Taxes next year.
Save Double Money: It's a good idea to “go green” and add some energy saving extras to your house in the first place. This saves a nice bit of cash on your electric bill. And it also saves plenty of money with your Taxes! A Tax Credit of up to $500 for energy saving extras that expired in 2007 has been renewed for 2009.
Be Patient: Were you thinking of installing energy efficient windows and appliances immediately? Well, it will pay to wait a bit. If you install the new equipment in January of 2009, the amount spent on those items will be Tax Deductible. Be a little patient if you want to save up to $500!
Always a Catch: Naturally, the IRS is going to impose limits. Here is the maximum amount you can spend on the allowable items.
• Windows: $200
• Exterior doors, roofing or insulation: $500
• Most heating, ventilation and air-conditioning improvements: $300
• Furnaces or hot water heaters: $150
And remember, no matter how much you spend on the improvements, you can only claim $500. So if it cost you $5,000 to install new insulation, you can still claim only $500 of what it cost. Also, you can only deduct the cost of the equipment. Not the labor.
Getting Greedy: Do not try to claim items that do not apply. Adding a new pool to your house would not qualify as an “Energy Efficiency” or “Renewable Energy” Tax Credit. You can only claim items that make your energy usage more efficient, like new windows, air conditioning improvements, or new furnaces. If you are unsure of what you can claim, get some professional advice.