Homeowners have until December 31 to buy materials and install energy efficient home improvements under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. Provisions of the bill, an extension of previous tax credits, mandate that you buy only ENERGY STAR-compliant biomass stoves, heat and air conditioning units, insulation, roofing, water heaters, windows, doors and skylights.
Consumers must check with The Department of Energy to view precise details of products included in the tax credit program. To file for the credit, you need to include IRS Form 5695 in your April 2011 returns. Each product that complies is sold with a Manufacturer Certification Statement, which you'll need to photocopy for your records and send along with your tax filing. You can install as many qualifying items as you wish, but there is a $500 lifetime limit on credits that expire on December 31, 2010.
Home improvements to consider for credits
Energy Savers lists the following projects and potential tax credits for items installed in your primary residence:
Biomass stoves, includes contractor installation costs: $300Central air conditioning, includes installation, $300
Electric Heat Pumps, includes installation, $300
Furnaces and Boilers, includes installation, $100
Advanced Main Air Circulating Fan, includes installation, $50
Insulation, materials only, 10 percent of the cost, up to $500
Roofing, materials only, 10 percent of the cost, up to $500
Water Heaters (non-solar), includes installation costs, $300
Windows, Doors, and Skylights, materials only, 10 percent of the cost, up to $500, but windows are capped at $200.
According to ENERGY STAR, performance criteria for windows, doors and skylights are determined by climate zones across the country and performance ratings established by The National Fenestration Rating Council (NFRC). Each product will contain the NFRC label that lists the performance based on U-factor, Solar Heat Gain Coefficient, Visible Transmittance, Air Leakage, and Condensation Resistance. In addition, the manufacturer or retailer will give each buyer the Manufacturer Certification Statement required for a tax credit.
Looking ahead to the future
There are green, energy efficient products and home improvements that will remain eligible for tax credits through 2016 at 30 percent of the cost with no upper limit. These include geothermal heat pumps, solar energy systems, fuel cells, and wind energy systems. FYI: You can also receive credit up to $7,500 if you purchase a plug-in electric vehicle.