Residential Energy Credits

The nonbusiness or residential energy property credit that expired in 2007 has been reinstated for 2009 and 2010. You may be able to claim an income tax credit of 30% of the cost of certain energy-efficient property or improvements you place in service in 2009 or 2010. The total cumulative amount of credit you can claim over the two years is limited to $1,500. Qualifying property that meet certain prescribed energy standards can include high-efficiency heat pumps, air conditioners, water heaters, energy-efficient windows, doors, insulation materials, and certain roofs. Under current law, this credit is allowed against the alternative minimum tax (AMT) for 2009 but not for 2010. Congress may later enact a “patch” that could permit the credit to reduce AMT in 2010, but this is uncertain. In addition to the Federal tax credit, many states and electric and natural gas utilities grant credits for energy efficiency improvements.  Now would be a good time to make these kinds of improvements in order to save tax and to reduce looming energy costs for winter.