| If you would like to make your existing
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| | limits:Up to $50 for any advanced main
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| home more energy efficient and get some
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| | air circulating fan;
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| help paying for the improvements, you
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| | Up to $150 for any qualified natural
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| need to know about the Energy Tax
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| | gas, propane or oil furnace or hot water
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| Incentives Act of 2005. The new law
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| | boiler;
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| provides a $500 lifetime credit against
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| | Up to $300 for any item of
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| your federal income tax for the cost of
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| | "energy-efficient building property."
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| certain energy-saving home improvements
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| | This includes certain qualifying
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| that you make to your home after December
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| | electrical heat water pumps, electric
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| 31, 2005 and before January 1, 2008. Up
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| | heat pumps, geothermal heat pumps,
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| to $200 of the tax credit may be applied
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| | central air conditioners and natural gas,
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| to windows.As you may know, a tax credit
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| | propane or oil water heaters.Expenditures
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| is far more favorable than a deduction of
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| | for labor costs for onsite preparation,
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| the same amount. Deductions only reduce
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| | assembly or original installation may be
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| the amount of income that is subject to
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| | included. Improvements must be installed
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| tax. A tax credit, on the other hand, is
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| | in or in connection with a dwelling unit
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| a dollar for dollar reduction of the tax
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| | located in the United States that is
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| due when you file your income tax return.
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| | owned by you and used by you as your
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| So, if you are in the 28% income tax
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| | principal residence.There are energy
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| bracket, the new $500 credit is
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| | efficiency standards described in the new
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| equivalent to a tax deduction of nearly
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| | law that your home improvements must
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| $1800!Here are highlights of the new
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| | meet, so some investigation on your part
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| provisions:There is an overall lifetime
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| | will be necessary to be sure that the
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| cap on the credit of $500, and a maximum
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| | improvements will qualify for the credit.
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| of $200 of the credit may be applied to
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| | For this reason, if you hire a third
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| qualified window expenditures. Subject to
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| | party to do the work, your written
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| those limitations, you may receive a
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| | agreement with the contractor should
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| credit for the sum of the
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| | include the contractor's guaranty that
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| following:Building Envelope Components.
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| | the installed property will meet the
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| Ten (10%) percent of your expenditures
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| | energy efficiency standards of the new
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| for so called "building envelope
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| | law.There is one potential trade-off, if
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| components" will qualify for the tax
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| | you use the credit. Many improvements to
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| credit. Building envelope components
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| | your home will increase your "tax basis"
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| include the following:any insulation
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| | in the property, and this increased tax
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| material or system which is specifically
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| | basis may, in turn, reduce the amount of
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| and primarily designed to reduce the heat
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| | capital gain that is realized if you sell
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| loss or gain of a dwelling unit when
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| | your home at a profit. The increase in
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| installed in or on such dwelling unit,
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| | tax basis that would otherwise result
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| exterior windows (including skylights),
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| | from energy efficient improvements that
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| exterior doors, and
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| | qualify for the credit will be reduced by
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| any metal roof installed on a dwelling
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| | the amount of the allowed credit. Since
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| unit, but only if such roof has
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| | the tax credit decreases your tax basis,
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| appropriate pigmented coatings which are
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| | you are likely to have more capital gain
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| specifically and primarily designed to
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| | at the time of sale. This will not affect
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| reduce the heat gain of such dwelling
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| | you if all of the capital gain realized
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| unit.To qualify for the credit, the
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| | at the time of sale is protected by the
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| building envelope components must be
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| | $250,000 exclusion ($500,000 for married
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| installed in or on a dwelling unit
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| | couples) for gains realized on the sale
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| (including a manufactured home) located
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| | of your principal residence. But even if
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| in the United States that is owned by you
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| | there is an increase in the taxable
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| and used by you as your principal
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| | capital gain realized when you sell your
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| residence. Installation of envelope
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| | home, it will almost certainly be
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| components in a second or vacation home
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| | outweighed by the advantage of using the
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| or rental property therefore will not
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| | new income tax credit currently.Like so
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| qualify for the new tax break.Only new
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| | much of the Internal Revenue Code, the
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| components are eligible for the credit
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| | new provisions encouraging energy
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| and the components must reasonably be
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| | efficient home improvements seem
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| expected to remain in use for at least 5
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| | unnecessarily complicated, but we have to
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| years.Energy efficient property
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| | consider the source - Congress! However,
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| expenditures. Amounts paid for
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| | a bit of patience and careful planning
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| "residential energy property
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| | will bring you some very real tax savings
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| expenditures" will also qualify for the
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| | and help the environment to boot!
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| credit up to the following specific
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|
