New Tax Breaks for Energy Efficient Home Improvements

If you would like to make your existing home more energy efficient and get some help paying for the improvements, you need to know about the Energy Tax Incentives Act of 2005. The new law provides a $500 lifetime credit against your federal income tax for the cost of certain energy-saving home improvements that you make to your home after December 31, 2005 and before January 1, 2008. Up to $200 of the tax credit may be applied to windows.

As you may know, a tax credit is far more favorable than a deduction of the same amount. Deductions only reduce the amount of income that is subject to tax. A tax credit, on the other hand, is a dollar for dollar reduction of the tax due when you file your income tax return. So, if you are in the 28% income tax bracket, the new $500 credit is equivalent to a tax deduction of nearly $1800!

Here are highlights of the new provisions:

There is an overall lifetime cap on the credit of $500, and a maximum of $200 of the credit may be applied to qualified window expenditures. Subject to those limitations, you may receive a credit for the sum of the following:

Building Envelope Components. Ten (10%) percent of your expenditures for so called "building envelope components" will qualify for the tax credit. Building envelope components include the following:

• any insulation material or system which is specifically and primarily designed to reduce the heat loss or gain of a dwelling unit when installed in or on such dwelling unit,
• exterior windows (including skylights),
• exterior doors, and
• any metal roof installed on a dwelling unit, but only if such roof has appropriate pigmented coatings which are specifically and primarily designed to reduce the heat gain of such dwelling unit.

To qualify for the credit, the building envelope components must be installed in or on a dwelling unit (including a manufactured home) located in the United States that is owned by you and used by you as your principal residence. Installation of envelope components in a second or vacation home or rental property therefore will not qualify for the new tax break.

Only new components are eligible for the credit and the components must reasonably be expected to remain in use for at least 5 years.

Energy efficient property expenditures. Amounts paid for "residential energy property expenditures" will also qualify for the credit up to the following specific limits:

• Up to $50 for any advanced main air circulating fan;
• Up to $150 for any qualified natural gas, propane or oil furnace or hot water boiler;
• Up to $300 for any item of "energy-efficient building property." This includes certain qualifying electrical heat water pumps, electric heat pumps, geothermal heat pumps, central air conditioners and natural gas, propane or oil water heaters.

Expenditures for labor costs for onsite preparation, assembly or original installation may be included. Improvements must be installed in or in connection with a dwelling unit located in the United States that is owned by you and used by you as your principal residence.

There are energy efficiency standards described in the new law that your home improvements must meet, so some investigation on your part will be necessary to be sure that the improvements will qualify for the credit. For this reason, if you hire a third party to do the work, your written agreement with the contractor should include the contractor's guaranty that the installed property will meet the energy efficiency standards of the new law.

There is one potential trade-off, if you use the credit. Many improvements to your home will increase your "tax basis" in the property, and this increased tax basis may, in turn, reduce the amount of capital gain that is realized if you sell your home at a profit. The increase in tax basis that would otherwise result from energy efficient improvements that qualify for the credit will be reduced by the amount of the allowed credit. Since the tax credit decreases your tax basis, you are likely to have more capital gain at the time of sale. This will not affect you if all of the capital gain realized at the time of sale is protected by the $250,000 exclusion ($500,000 for married couples) for gains realized on the sale of your principal residence. But even if there is an increase in the taxable capital gain realized when you sell your home, it will almost certainly be outweighed by the advantage of using the new income tax credit currently.

Like so much of the Internal Revenue Code, the new provisions encouraging energy efficient home improvements seem unnecessarily complicated, but we have to consider the source - Congress! However, a bit of patience and careful planning will bring you some very real tax savings and help the environment to boot!

John Pollock is an attorney practising in Detroit, Michigan and the webmaster of http://www.forms-free-4-all.com

---

Google News Updated : Sun, 12 Oct 2008 23:51:23 GMT Falcons' Ryan is not your typical rookie QB - FOXSports.com Boston Globe Falcons' Ryan is not your typical rookie QB FOXSports.com - 36 minutes ago by Alex Marvez Alex Marvez is a Senior NFL Writer for FOXSports.com. He's covered the NFL for 14 seasons as a beat writer and is the president of the Pro Football Writers of America. Falcons missed chances in red zone Atlanta Journal Constitution Bears rally late, fall to Falcons on last-second FG Chicago Sun-Times Sports Network - SI.com - The Associated Press - Rotowire all 607 news articles Publ.Date : Sun, 12 Oct 2008 23:14:27 GMT First Second-Generation Astronaut, Richard Garriott, Launched Into ... - AHN Canada.com First Second-Generation Astronaut, Richard Garriott, Launched Into ... AHN - 2 hours ago Vienna, VA (AHN)-Space Adventures, Ltd, a company that provides space missions to the global community, announced that client Richard Garriott and his crew successfully launched from the Baikonur Cosmodrome in Kazakhstan to the International Space ... Video: Raw Video: US space tourist begins journey AssociatedPress US game designer blasts into space with DNA cargo The Associated Press VIP Breakdown - Independent - Slashdot - Houston Chronicle all 1,036 news articles Publ.Date : Sun, 12 Oct 2008 21:28:36 GMT UPDATE 1-Tropical Storm Nana forms in Atlantic - Reuters UPDATE 1-Tropical Storm Nana forms in Atlantic Reuters - 2 hours ago MIAMI, Oct 12 (Reuters) - Tropical Storm Nana, the 14th of the Atlantic hurricane season, formed on Sunday in the Atlantic Ocean east of the Caribbean islands, the US National Hurricane Center said. Forecasters: Tropical Storm Nana forms in Atlantic The Associated Press Tropical Storm Nana Forms Central Florida News 13| El Nuevo Herald - Orlando Sentinel - CBS 4 - WFMY News 2 all 175 news articles Publ.Date : Sun, 12 Oct 2008 21:29:57 GMT Breast Cancer Awareness Month: Cancer survivor shares her story - Naples Daily News ChattahBox Breast Cancer Awareness Month: Cancer survivor shares her story Naples Daily News - 1 hour ago By LIANE SMITH (Contact) She felt pain in her breasts. One of her aunt’s died in February from breast cancer. Another aunt, in her 60s now, has battled it on and off for more than a dozen years. Pink And Purple Join To Help Women eFluxMedia Breast Cancer Awareness Month Should Be Prevention Month! Food Consumer Princeton Times Leader - San Marcos Daily Record - Hudson Reporter - WISC all 136 news articles Publ.Date : Sun, 12 Oct 2008 22:31:44 GMT Mighty Chihuahuas Eclipse DiCaprio and Crowe in Test of Star Power - New York Times Mighty Chihuahuas Eclipse DiCaprio and Crowe in Test of Star Power New York Times - 2 hours ago By BROOKS BARNES LOS ANGELES - This is how far movie stars have fallen in their ability to pull audiences into theaters, at least when the story revolves around Iraq and the messiness of the Middle East: A picture about talking dogs, “Beverly Hills ... Dogs rule: 'Beverly Hills Chihuahua' No. 1 again Los Angeles Times 'Chihuahua' fetches $17.5M, remains top movie dog The Associated Press Reuters - Hollywood.com - Cincinnati.com - Bloomberg all 374 news articles Publ.Date : Sun, 12 Oct 2008 21:18:44 GMT Palin talks economic worries in Appalachian Ohio - The Associated Press Times Online Palin talks economic worries in Appalachian Ohio The Associated Press - 39 minutes ago ST. CLAIRSVILLE, Ohio (AP) - Sarah Palin told voters in southeastern Ohio on Sunday that she and running mate John McCain would bring jobs back to this economically depressed piece of Appalachia. John McCain and Sarah Palin try new tactics Los Angeles Times US-POLITICS Summary Washington Post Milwaukee Labor Press - Tampa Tribune - guardian.co.uk - FOXNews all 2,032 news articles Publ.Date : Sun, 12 Oct 2008 23:11:58 GMT Tigers still seeking QB to turn season around - SportingNews.com Seattle Post Intelligencer Tigers still seeking QB to turn season around SportingNews.com - 38 minutes ago AP Sports Wri AUBURN, Ala. (AP) -- The Auburn Tigers didn't figure they'd be in this position: Unranked, desperately trying to salvage a once-promising season and still seeking a quarterback solution seven games into the season. Tuberville And Tigers Trying To Regroup Dawg Post A Pig Sooie Shocker in Auburn WTVM BamaMag.com - Sports Network - The Associated Press - International Herald Tribune all 647 news articles Publ.Date : Sun, 12 Oct 2008 23:13:08 GMT Merchant Datafeeds Amazon Associate Feed

PARLOT::Ebooks, Scripts, Websites, and more...

Adsense websites

Single hung aluminum window glass repair

Let's talk about repairing broken glass in an aluminum frame... Read More

If You Want to Bring Your Bathroom Up to Date, Consider Fitting a Shower Stall

Modern shower stalls look sleek and stylish. If you have... Read More

Heated Driveways: Who, What, Where, When, Why, & How

What are heated driveways? The obvious answer is, "a driveway... Read More

Dining Rooms: Designing for Your Emotional Well-Being

I read an interior design book last night. Since I... Read More

Choosing a Home Construction or Remodeling Contractor

Choosing the right Contractor is the most important aspect of... Read More

How To Clean Your Air Conditioner Like A Pro

Jack Frost is nipping at our nose and Santa Clause... Read More

Kitchen Remodeling Costs

It is important to prepare a budget for your kitchen... Read More

How To Find Cat Mailboxes

You can add a personal touch to your home or... Read More

Do You Make These Window Replacement Mistakes ?

Whether it's a misguided baseball, or storm damage, sooner or... Read More

Consumer Guides: Finding A Quality Contractor and Power Washing Tips

Power washing is the application of high pressure water spray.... Read More

Your Home is Your Symphony

"Dr. Carl Sagan once wrote, "Somewhere, something incredible is waiting... Read More

Building or Decorating Your Home Requires House Plans

There are some things to consider when creating plans for... Read More

Save Time & Money Doing Your Own Basic Electric Wiring

Hiring a professional electrician can be very expensive and is... Read More

Got Attic Mold? Lets Talk Energy Conservation!

It happens to countless homeowners around the end of the... Read More

Designing Your Log Home: Tips To Keep You Out of Trouble

Nearly every log home is a custom design, whether you... Read More

Home Remodeling Business

Need for home remodelingThe need for home remodeling is on... Read More

How to Care for Laminate Flooring

It's hard to damage and easy to care for laminate... Read More

An Introduction to Waterproofing Systems

Many homeowners find it necessary to invest in a waterproofing... Read More

Asphalt Paving Driveway Maintenance Tips

Asphalt paving or Hot Mix Asphalt is typically what one... Read More

Tearing Down the House

Last year, we bought this big ol' 1887 house. We... Read More

Thinking of Remodeling Your Kitchen?

If you like to cook, or even if you just... Read More

Deck Building Basics

In my previous article, "planning for a new deck," I... Read More

How To Buy Double Glazing In The UK

Double glazing reduces heat loss through your windows. You can... Read More

Tips For Buying a Whirlpool Bath Online

So you're building the bath of your dreams but find... Read More

Planning Your In-Wall Speaker System

So you've finally decided to get your favorite music throughout... Read More