What 2011 Tax Credits Are Available for Green Home Upgrades?

Tax time has rolled around again, and as residents of the United States begin breaking open their W-2 paperwork, the first thought on many minds is how to take advantage of as many tax credits as possible. While some tax credits are only available for businesses, you can take advantage of certain tax credits if you made energy-efficient improvements to your home during 2011. Had new energy-efficient windows installed? A tankless hot water heater? These will save you some money on your taxes, but there are a few provisions that you'll have to consider.

First, homeowners who took tax credits in 2005-2010 are not eligible to participate in the tax credits unless they used less than $500 of tax credits during those years. For instance, if you took a $250 tax credit for 2010, then you can take up to a $250 tax credit for 2011.

The qualified improvements that will allow you to take a tax deduction include the following:

1. Doors and Windows

Energy efficient doors and windows must be energy star rated, and the tax credit does not cover the cost of installation. There is only a $200 tax credit available for the installation of high-efficiency doors and windows.

2. Water Heaters

Tankless and high-efficiency tank water heaters qualify for as much as a $300 tax credit, which also includes the cost of installation. There are specific restrictions concerning the how efficient the water heater must be to take the credit, so double check with the retailer before you buy.

3. Insulation

All types of insulation are covered by the 2011 energy efficiency tax credit, but they must meet IECC requirements. this is the international energy conservation code. Installation costs are not covered by the credit, and there is a maximum of $500 that can be claimed.

4. HVAC Components

HVAC components are the parts of your heater and air conditioner. As long as the components are 95% efficient, they qualify for as much as a $300 credit. Installation costs can be included in the credit.

5. Biomass Stoves

Biomass stoves are woodburning stoves, but they can also use other fuels like corn kernels for fuel. There is a $300 credit limit for these stoves.

6. Metal and Asphalt Roofs

Metal and asphalt roofs qualify for the full $500 credit, but the installation costs aren't covered

The significant reduction in the energy efficiency tax credits for the 2011 tax season has taken the amount of deduction from approximately 25% of the cost of energy improvements to approximately 10%. In spite of this reduction, it must be remembered that over the life of the product you purchase, you'll save a significant amount over what you would have spent on energy costs for your home. Rather than the reductions causing you to rethink making improvements to your home, look at what retailer and corporate incentives are available and take advantage of such offers as free financing and reduced-cost installation. Further, the energy efficient property credit covers major system upgrades to the home including solar systems and geothermal heating. These are a different form of credit from the efficiency upgrade credit, however. Consult your tax adviser for further information concerning these and other tax credits for which you may qualify.

Sources:
Internal Revenue Service: Home Energy Credits Still Available for 2011: www.irs.gov