Experts say most federal tax credits for energy-efficient home improvements will not be extended at the end of 2011. Any “green” projects should be started no later than October or November as purchases and installations be completed before the new year.
Products and projects that qualify for the federal tax credit may be found at:
Rebates and tax credits are also offered by states and these incentives can be searched at:
The maximum federal tax credit is $500 and the amount varies depending on the product. But tax credits are often better than deductions, which only reduce your taxable income. Tax credits reduce your total tax liability, so it’s like getting money back from the IRS.
Energy-efficient upgrades also save you money every year. Insulation can reduce air leakage 20 to 30%, saving about $220 a year. New windows can save up to $500 a year. A new air conditioner is typically 30% more efficient than a 10-year-old one. Central air cooling, new ductwork, and water heaters are other examples of very cost-effective improvements.
The good news is that federal tax breaks are available until 2016 for bigger green projects. Improvements such as solar energy systems, geothermal heat pumps, small wind turbines and fuel cells may earn a tax credit worth up to 30% of the cost, no matter the cost. For more information, check the Energy Star website: http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
Always remember to consult a tax professional before proceeding with expenditures that have tax implications.