Converting your house to an energy-efficient green home or trading in your SUV for a gas-sipping hybrid or electric model ultimately will save you money and protect the environment. However, energy-efficient products and renewable energy options for your home often don’t come cheap. Luckily, homeowners can take advantage of federal, state, and local tax credits that can help offset the costs.
Part of the challenge, however, is figuring out what actually qualifies for a tax credit and then claiming it on your taxes.
A good place to start is the U.S. Department of Energy’s (DOE) EnergySavers (link to: http://www.energysavers.gov/financial) web site.
There, you can get a complete list of products eligible for energy credits through 2016. These include geothermal heat pumps, solar- and wind-energy systems, and fuel cells. All must be installed in your home by Dec. 31, 2016. Except for the geothermal pump, you can take credit only for systems installed in your primary residence.
The federal government also offers tax credits for plug-in electric cars. Depending on the vehicle’s battery system, a full tax credit of up to $7,500 is available. However, there is a caveat. Only the owners of the first 200,000 vehicles sold will be allowed to take the credit.
When buying these products, remember, too, that you can claim a federal tax credit only once. Furthermore, the credit applies to the year the product is purchased. To learn more, you should visit the IRS (link to: http://www.irs.gov/) website or consult your tax accountant for the proper forms.
One last note on federal tax credits: If you installed new heating and air-conditioning systems, insulation, a new roof, and windows in 2009 and/or 2010, but didn’t take the tax credit for those upgrades, you may have missed out on up to $1,500 or 30 percent of what you spent. The best advice is to amend your tax filings, but you should do it now. Typically, you only can go back two to three years.
In addition to federal tax credits, you can avail yourself of state and local tax incentives. To find out which are available in your community, visit the Database of State Incentives for Renewables and Efficiency (link to: http:// http://www.dsireusa.org/). Established in 1995, DSIRE offers a complete and updated list of incentives and policies by state, including those offered by local utility companies. Easy to navigate, this site is worthy of bookmarking!
The next installment of this series will address other programs that could help you achieve your goal of living a greener lifestyle. Until then, stay cool.
Author’s Note: Financing a Green Lifestyle is a series describing tax credits and mortgage and home-improvement financing programs, including grants, that can help offset the costs of going green.