Good News! The tax credit for energy-efficient home improvements has been extended for another year.
However, the tax credit will be less in 2011 than it was in 2010 and 2009 – so if you can purchase your energy-efficient appliances now, you should!
For 2009 and 2010, a taxpayer can take a total of 30% of the value of energy-efficient home improvements, up to a maximum of $1500 for both years combined. For 2011, the tax credit is offered for only 10% of the cost of energy-efficient home improvements, up to a maximum of $500.
Other restrictions also apply for 2011. Certain appliances have their own maximum credit amount. For example, you can only get up to $300 for a water heater. Efficiency requirements have increased as well in certain cases – for example, gas boilers must now be 95% efficient. Tax credit requirements for gas furnaces remains at 95%, as it has been for the last two years. This means that not all Energy Star appliances will qualify.
And, if you claim credits in 2009 or 2010, they count against the $500 maximum for 2011. If you’ve already taken more than $500 in tax credits, you can’t claim anything more in 2011.
Remember, too, that the tax credits are only for improvements to an existing home that is your principal residence. New construction and rentals don’t qualify.
If you’ve been thinking of upgrading to more energy-efficient equipment, don’t make it a New Year’s resolution: do it now!
But procrastinators take heart: even if you don’t get around to buying until next year, you’ll still get some benefits.