Some of the credits include:
New 10% personal tax credit for energy efficient improvements to existing homes. The lifetime maximum credit per taxpayer is $500 and applies for property placed in service during 2006 and 2007.
Homeowners will probably find this credit most appealing. It applies to improvements to a building’s “envelope.” Upgraded insulation; metal roofs coated with heat-reducing pigments; and energy-efficient windows, doors, and skylights are eligible. A homeowner will have to do $5,000-worth of improvements to get the full $500 credit, but these improvements may be a good idea to consider for owners of older homes. The credit for windows is capped at $200, but installing energy-efficient windows is one of the most effective ways to reduce your heating and air-conditioning bill.
The same 10% credit also applies to a list of specific items, but you may need to consult with your plumber and HVAC technician to figure out if they will be useful to you. Advanced main air-circulating fans qualify for a credit of up to $50, and certain natural gas, propane, or oil furnaces or hot water boilers are eligible for a credit of up to $150. Also, some highly efficient electric and geothermal heat pumps qualify for a credit of up to $300.
New 30% tax credit for the purchase of qualifying residential solar water heating systems, photovoltaic equipment which converts sunlight to electricity, and fuel cell systems. The maximum credit is $2,000 for solar systems, and $500 per kilowatt of fuel cell capacity. The credit applies for property placed in service in 2006 and 2007.
High-tech-loving homeowners may want to consider this credit that can be taken in addition to the 10% or $500 credit. The credit has some quirky limitations, however. First, these gadgets can’t be used to heat swimming pools, hot tubs or the like. Second, the bill specifies that fuel-cell equipment must be installed on the taxpayer’s “principal” residence, but photovoltaic and solar water-heating equipment need only be installed on a taxpayer’s residence.
Business tax credit for the construction of new energy efficient homes. The credit is either $2,000 or $1,000 per home, depending on the type of home and the energy reduction standard it meets. The credit applies to homes whose construction is substantially completed after December 31, 2005 and purchased in 2006 and 2007.
This message brought to you by: Cormier & Rea, Inc. Sturbridge MA. Providers of Income tax planning and preparation and financial planning. For more information about this or any other issues regarding income tax planning or preparation or financial planning, feel free to contact us. Like Cormier & Rea, Inc. on Facebook for timely updates.