Energy efficient tax credit

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An energy efficient tax credit is another incentive that can help people to make the decision to be more energy efficient. Many of these tax credits are applicable to those who buy energy efficient appliances and other similar items for their homes. The hope is that by offering tax credits, the federal and local governments will be able to slowly decrease the dependency on natural gas, coal, and other depleting resources.

There are some basic requirements that homeowners must meet in order to be able to qualify for an energy efficient tax credit. In addition to buying the equipment new, you are also expected to keep these items installed for at least five years. This should not be too difficult, especially since you will want to keep the items installed for more than five years if you want to see a return on the initial investment.

Even though people tend to think of appliances as being the main items that will supply a homeowner with an energy efficient tax credit, there are numerous other items that will qualify you for this credit. Knowing which items will help you get the most bang for your buck is helpful if you want to save as much money as possible.

Some of the items that can help you qualify for this credit are: exterior doors and windows; skylights; insulation; central air conditioning and heating; geothermal heat pumps; storm windows; metal roofs; and hot water boilers.

Solar panels and other solar-related energy products that have an electricity-only efficiency level of more than 30 percent and generate at least half a kilowatt of energy also count among those items that can help a person be eligible for an energy efficient tax credit.

Taxpayers can receive one credit equal to 30 percent of the qualified investment in a solar panel up to a total credit of $2,000. Another equivalent credit can be obtained by investing in a hot water system as long as no parts of the system are used to heat a pool or a hot tub. The credits are reserved for those who are using the energy for mass consumption and hot tubs are not considered to meet those criteria.

There are different dollar limits available as energy efficient tax credits depending on what kind of energy is utilized. The amount that can be obtained by those who install a hot water heating system is $2,000. Another credit that is available is $50 for any advanced main air circulating fan. A credit of $150 is available for those who buy a qualified natural gas, propane or oil furnace and hot water boiler.

In addition to being able to receive an energy efficient tax credit, those who choose to install energy efficient appliances and other items in their home can do quite a bit to increase the value of their home. When the real estate market is as bad for sellers as it is now, having an energy efficient home may be the one thing that could make your home more attractive to a potential buyer.

More information about what items can help you receive an energy efficient tax credit are available from the IRS as well as your local taxing agency.

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