The Other Real Estate Tax Credit -- Energy Efficiency
Looking over the list of Moneywatch staffers' New Year's resolutions for 2010, I was impressed at how many of them had to do with real estate purchases. Apparently the message that interest rates are low (but might not be forever) and that prices have dropped is getting through to somebody.
I also think that real estate will see a decent spring from the First-Time Homebuyer Tax Credit, which drove much of the market in 2009. For those of you who have been stuck under a rock, that $8,000 credit is available to single persons making up to $125,000, and married couples making up to $225,000. There's also a $6,500 credit for some current owners who sell their homes and buy new ones by June 30.
But what if you're not buying a property this year, but still want to better your home and get some kind of tax break? Is there a credit for you?
If you're a homeowner, of course there is.
There are a number of improvements you can make to your principal residence (sorry, not the ski cabin) that will qualify for the Energy Efficiency Tax Credit. It's not as fun to buy a new hot water heater as it is to buy a new house, but you can still get a tax credit of up to $1,500 -- not a bad deal.
Basically, the government is trying to encourage you to save energy, so you can get a credit of 30% of the cost of certain improvements -- up to a $1,500 credit over 2009 and 2010. This credit is per home, so if there are two of you and you each spend $5,000 on new windows, you don't get to claim $3,000. Sorry.
This is separate from the Energy Star appliance rebate program, which depending on the state, can you get $50 back on, say, the purchase of an energy efficient refrigerator. This one's about unsexy stuff like roofs, heat pumps, and boilers. But the good news is that there's no income limit here, so even if you're a gazillionaire you can still enjoy the savings.
- Eligible products include:
- Central air conditioning
- Heating improvements such as new boilers and furnaces
- Heat pumps
- Fans (known as "advanced main air circulating fans") that blow your existing heat through your house
- Certain roofing materials
- Hot water heaters
There's a tax credit that lasts until 2016 on certain other materials (like storm windows and insulation) but the credit for the list above only runs through December so get going.
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