Federal tax credits for New Year improvements

Posted by Woodrow Aames ~ December 31, 2011

Now that 2011 has passed, many of the Federal tax credits offered by the government for new windows, insulation, doors, and other products for home energy efficiency remodeling have also drawn to an end. Even with these incentives gone, you should still consider evaluating energy efficient materials before making a purchase, or choose other green home improvement projects that bring long-term returns on your investment.

For example, compare replacement windows ratings before settling on your purchase and installation choice. You may also want to evaluate on-demand, tankless water heaters that consume less power throughout your days and nights.

Looking ahead, tax credits will still be available for some ENERGY STAR-qualified products and installation costs through 2016 for your existing home and second property. Let's look at a few of them.

Geothermal heat pumps

You'll get up to a 30 percent-of-cost tax credit for buying one of the new generation geothermal heat pumps that use ground heat (or ground water thermal energy) instead of electrical energy to power your HVAC system. There is no upper limit on price applied to the credit, including installation and labor costs.

Wind turbines

Getting off the grid is one way to ensure energy efficiency at home. Like geothermal heat pumps, wind turbines can also qualify for tax credits through December 31, 2016. According to ENERGY STAR, your turbine unit must top out at a capacity of 100 kilowatts. Credit includes materials and labor.

Solar energy systems

Qualifying solar water heaters and solar panels (photovoltaic systems) bought and installed prior to December 31, 2016 will earn a tax credit on the following year's income tax returns. Solar water heaters must be designed to generate at least half of your total energy for residential use. Products must carry Solar Rating and Certification Corporation (SRCC) certifications.

The government requires that "photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement."

Fuel cells

The final item carried over through December 2016 for up to 30 percent-of-cost tax credit is fuel cells. These can only be used on your primary residence. A qualifying residential fuel cell and microturbine system must have a at least 0.5 kW capacity and reach a 30 percent energy efficiency.

Losing the credits from last year may curb consumers' enthusiasm for green remodeling, but those who want to keep their homes for the duration and lower bills and consumption over the long-haul may still take the plunge.

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