Home News Know the rules of cashing in on home improvement tax credits
Know the rules of cashing in on home improvement tax credits
Friday, 11 September 2009 20:27

There are several common home improvements that are eligible for a federal tax credit up to $1,500 if completed before Dec. 31, 2010.

Many of the eligible improvement items, such as roofing systems, will be labeled with an Energy Star logo — a program under the U.S. Department of Energy to help consumers make energy-efficient choices. But not all Energy Star-labeled products qualify.

The Energy Star Web site, energystar.gov, includes a list of qualifying products and their necessary specifications. Qualifying products also will include a manufacturer's certification statement — a certificate provided by the manufacturer guaranteeing that the product qualifies for the credit. The improvements must be made to existing homes. Different credits apply to new construction.

Homeowners should report the improvements on IRS tax form 5695. Be sure to save all receipts, the manufacturer's certification statement, and any Energy Star labels, says Frank Grim of Liberty Tax Service in Yorktown.

The cost-conscious should compare the credit-eligible products against products that do not qualify. Eligible windows, for example, are significantly more expensive than noneligible windows.

 

Heating and air systems

Certain central air conditioning systems, air source heat pumps, natural gas or propane furnaces, oil furnaces, gas, propane or oil hot water boilers and advanced main air circulating fans qualify for the credit.

Central air conditioning systems with a seasonal energy efficient ratio — which measures how efficiently a system will operate over an entire season — that is 14 or greater will qualify. The system also must have a of 12 or greater energy efficiency ratio, which measures how efficiently the system will operate when the temperature outside is 95 degrees. The higher these ratios are, the better.

Technically, the law does not require that both the heating and the air conditioning systems be replaced for one to qualify. But practically, both will have to be replaced for the qualifying system to run properly.

Your HVAC contractor should be able to tell you whether your system is eligible for the credit. Verify the information with a manufacturer's certificate.