Going for the Green

Making energy-saving improvements to your home can not only help you lower your heating and cooling bills, it can also earn you a tax credit from Uncle Sam that will put even more cash in your pocket. Buy a new energy-efficient furnace, for example, and you can get a tax credit of 30% of the cost, up to a limit of $1,500. To qualify, improvements or purchases must be made between January 1, 2009 and December 31, 2010.

There’s a long list of improvements that are eligible for the credit, including upgrades to your insulation, windows, doors, air conditioning, and appliances. The $1,500 cap is the maximum credit you can get, however, no matter how many of these improvements you make. That said, however, there’s no credit limit on bigger and more expensive projects like solar panels and wind-energy systems. You can get tax credits for these projects from now until the end of 2016, but you must claim the credit in the year the project is paid for. You can also get tax credits for these major add-ons if they are included in the cost of building a new home, but you can’t claim the credit for energy-efficient windows, doors, insulation, and such.

Not all products and projects are eligible for the tax credit. Start by checking out the Environmental Protection Agency’s Energy Star Web page. To claim the credit, you will also need the receipts for the project, along with a Manufacturer’s Certification Statement, which is a signed document from the manufacturer that the product or component qualifies for the tax credit. There’s one other caveat — the credit is non-refundable. In IRS lingo, that means if the credit drives your tax liability below zero, you don’t get any money back.