Home Improvement Tax Credit

Home Improvement Tax Credit

Home Improvement Tax Credit

Introduction: It is the best time for homeowners to get their energy saving related home improvement projects completed. Not only will you save money on energy costs but you will save on your tax bill with federal tax credit.

There are a lot of reasons why homeowners should consider starting their home improvement projects that are related to energy savings. Not only will they make your home more efficient and save energy they may qualify for a federal tax credit.

As part of an effort to reduce dependence on foreign sources of energy and reduce global warming, the American Recovery and Reinvestment Act of 2009 provides a tax credit to help offset the costs of making energy efficiency improvements to homeowners. Some of the key details of the program are listed below:

The energy tax credits apply to a variety of items to including their installation costs such as more energy efficient windows, doors, heating and cooling equipment, insulation and more.

The total amount of the energy tax credit is equal to 30% of the installed cost of the qualifying products up to a total of $1,500.

If a qualifying purchase is not large enough to qualify for the maximum credit of $1,500, the remaining available tax credit can be claimed for additional qualifying purchases.

The reason many homeowners should take part in this program is because the tax credits, unlike deductions, are subtracted directly from the total amount you owe on your personal income taxes. For example, if you complete your tax return and calculate that you owe the IRS $3,000, a tax credit of $1,500 will reduce your tax bill to only $1,500. Be sure to check with the IRS or your tax adviser on how to best take advantage of these home improvement tax breaks.

To take advantage of the American Recovery and Reinvestment Act of 2009 tax credits, you must complete your home improvement projects between January 1, 2009 and December 31, 2010. Your savings won't be limited to a one-time tax credit. You'll continue saving with reduced monthly energy costs for cooling and heating. You will also have the satisfaction of contributing to the reducing of the national energy use.

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