How to Get Energy Tax Credits

The energy tax credit was signed into law on August 8th, 2005 as part of the Energy Policy Act of 2005 (also known as the EPACT). What EPACT allows is for homeowners to claim a tax credit based on certain environmentally friendly home improvements that are made to their home. The idea here is simple. With the added incentive of tax breaks, more homeowners will choose to pay a bit extra for energy efficient building products that improve the over all energy efficiency of their home. This will result in added energy savings and help the environment at the same time. The trick is knowing which improvements qualify, and how you can go about claiming the credits on your taxes.

Energy Tax Credit 101
The energy tax credit allows you to claim a tax credit based on a specific percentage of your home improvement costs for energy efficient materials. Don't think you can claim just anything when it comes to the energy tax credit, however. There are several categories of home improvements that have been determined by the government as qualifying improvements. Anything that falls outside these guidelines won't cut it if you experience an audit. Qualifying improvements include:

• Exterior Doors


• Exterior Windows and Skylights


• Metal Roofs


• Insulation systems


• Energy Efficient HVAC


• Solar Power and Solar Heating Systems


• Fuel Cell Power Systems

An Energy Star Product means an Energy Star Tax Credit
Besides targeting the pre-approved home improvements listed above, always shop for Energy Star rated products. Windows, doors, household appliances, and HVAC units all come in Energy Star rated models, and if you look for the sticker before you buy you're much more likely to be able to claim an energy star tax credit on next year's taxes. Why? Because the energy star label is only given to products that meet specific governmental standards when it comes to energy efficiency. In other words, these products are pre-approved so that your energy star tax credit won't grab the attention of the IRS.

As Always, Save Your Receipts!!!
Installing energy efficient improvements is the important part for you as the homeowner, since you will save bundles of money in the long run when it comes to energy costs and utility bills. But for the IRS, your word is never enough. Be sure to save all documentation regarding the improvements you make, especially receipts, any product manuals, the manufacturer's certification statement, and all energy star labels if applicable. A good rule to follow is "when in doubt, choose the safe route."' In other words, save anything and everything that provides evidence of your expenses and efficiency ratings. You'll be thankful you did if you get audited.

Ask for Energy Smart Improvement to Get an Energy Tax Credit
If you're thinking about a home improvement project, be sure to mention to your contractor that you're interested in energy efficient building products, and tax credit eligible improvements, before the project gets underway. Doing so ensures that you'll not only be paying for the most cutting edge, environmentally friendly home improvement products, but that you'll get a welcome break on your taxes as well.