By Tim Burns
Increasing the energy efficiency of your home is one way to cut down on monthly bills, and now is a great time to make some modest home improvements that will allow you to take advantage of federal tax credits and boost your property value. According to Remodeling Magazine’s 2008-2009 “Cost vs. Value” report, energy efficient replacement projects are some of the best bets for recouping money at resale. Consumers can now take advantage of several new and expanded tax credits authorized by the American Recovery and Reinvestment Act of 2009 that encourage energy efficient home improvements.
Some qualifying improvements include routine work that every homeowner must undertake now and then, such as installing a new roof. However, other qualifying improvements are more involved including installing a wind or solar energy system. To qualify for tax credits, improvements must typically be made on the owner’s primary residence. Homeowners should keep in mind that just because a product has an ENERGY STAR seal—the Environmental Protection Agency’s standard for energy efficient consumer products—it doesn’t mean the purchase qualifies for the tax credit.
For the following home improvements, a household can take a tax credit for 30 percent of the improvement cost up to $1,500 total for all improvements “placed in service” during 2009.
• Windows and doors including energy efficient skylights, storm windows, exterior windows, storm doors and exterior doors;
• Roofing and Insulation, including metal or asphalt shingles;
• Heating and cooling systems including energy efficient central A/C units, oil and gas furnaces; and
• Water heaters including energy-efficient gas, oil, or propane water heaters and electric heat pump water heaters.
Before making any energy saving purchases, do your homework because not all products qualify for a tax credit. Also keep the following tips in mind:
Always check the company or contractor out with the Better Business Bureau. BBB Reliability Reports are available for free at www.bbb.org and will tell you if the business has a good rating and is accredited by the Better Business Bureau.
Homeowners should get several estimates for projects and remember that you do not have to use any specific contractor in order to take advantage of the tax credits.
To claim the tax credit for energy efficient products installed in 2009, you will need to file the 2009 IRS Form 5695 and submit it with your tax return by April 15, 2010. Unfortunately, the form won’t be available until late 2009 or early 2010, so if you are making a purchase now be aware that you need to complete the form when it becomes available and submit it with your return.
Save your receipts and request a “Manufacturer’s Certification Statement” for your records. A Manufacturer’s Certification Statement provides you with an acknowledgement that the product or service you are purchasing qualifies for a tax credit.
A full list of qualifying home improvements and answers to common questions are available online at www.energystar.gov/taxcredits. Also consider consulting a tax professional before filing your tax returns.
Tim Burns is the Public Affairs Director for the Better Business Bureau Serving Eastern Michigan (www.bbb.org).
