Saving Energy Can Give You a Tax Break

If you purchased energy-saving equipment for your home during 2009, or will during 2010 you may be eligible for a tax credit. The credit is equal to 30% of the cost, usually up to a maximum of a $1,500 credit.

Specifically, there are two separate credits, with the first being the Nonbusiness Energy Property Credit. This credit applies to homeowners who purchase high-efficiency heating and air conditioning systems, water heaters, stoves, and the cost of installation. Additionally, energy-efficient windows, doors, insulation, and roofs may also qualify, but the installation costs don’t count. The credit is equal to 30% of the qualifying cost up to $5,000 for a maximum credit amount of $1,500.

The second credit is the Residential Energy Efficient Property Credit. This credit is for someone who is looking to invest large sums of money to save on energy costs. The credit amount is also equal to 30% of the cost of equipment, but there is usually no limit to the credit amount. Qualifying equipment includes solar hot water heaters, solar electric systems, geothermal heat pumps, and wind turbines.

To determine if the equipment you purchase qualifies for these tax credits, you will first need to check the manufacturer’s tax credit certification statement. Not all energy efficient equipment qualifies, which is why it is important to do your research before making a purchase.