Tapping Into Tax Savings for Your Home

  • Insulating your home is one of the things the Alliance to Save Energy says you can do to save energy and earn up to 1,500 dollars in tax credits. (Photo courtesy of the EPA)

Tax credits have been extended and expanded for people who want to make their homes more energy efficient. Lester Graham spoke with Ronnie Kweller about that. She’s with the Alliance to Save Energy:

Transcript

Tax credits have been extended and expanded for people who want to make their homes more energy efficient. Lester Graham spoke with Ronnie Kweller about that. She’s with the Alliance to Save Energy:

Lester Graham: Ronnie, this stimulus package offers people a chance to save some money if they decide to insulate their home, or replace their heating or cooling system. How much is available?

Ronnie Kweller: Right now, up to $1500 – which is three times the amount that was available under earlier legislation. They also expand the percentage of the cost that can be covered, from 10% in the case of some of the items under the old law to 30%. The other good thing is that the tax credits have been extended through 2010. Originally, they were only for this calendar year. So I think that gives folks some opportunity to save and budget for some of these higher-ticket items, and get them in place between now and 2010, and still get that $1500 off their taxes.

Graham: Now, let’s say I want to replace my old water heater. How much could I get back in tax credit next year?

Kweller: 30%, up to $1500 – that’s if the water heater cost $5000, which probably it’s not that expensive.

Graham: This is a tax credit, not a tax deduction. What’s the difference?

Kweller: That is correct. A tax deduction means you take the amount off your taxable income and then you’re taxed on a lower amount of income. A tax credit is worth more, because once you have calculated the tax that you owe, it’s a dollar for dollar reduction in that tax bill.

Graham: What kind of energy efficiencies make the most sense for a home? If I’m looking at my house, where should I start making changes first?

Kweller: The thing that we usually recommend as the first step is to seal and tighten up the house with sufficient insulation for your climate region. And then sealing leaks and cracks around doors and windows with sealing product, such as caulking, weather-stripping, and foam sealants. And the good news is that all those types of products are now eligible for these tax credits. Again, assuming that they meet the standards that are in the law.

Graham: We tend to think of the Environmental Protection Agency’s Energy Star program as an assurance we’re buying an energy efficient product, but I understand not all Energy Star labeled products qualify for these tax credits.

Kweller: That’s correct. The one change that makes life a little bit more complicated for consumers is that under the old law, all energy star windows qualified for a tax credit. Now, there are certain additional requirements for the windows, as well as for the heating and cooling equipment. So, you can’t just go buy the Energy Star label, you really have to look at the very specific energy efficiency levels that these products must meet.

Graham: So, if I need details on that kind of requirement, where’s the best place to find them?

Kweller: One of the best places would be the Alliance Energy’s website at ase.org/taxcredits. We’ve made a great effort to have a user-friendly website that spells out the criteria in very clear language. The Energy Star website at energystar.gov is always very helpful in general on energy efficiency, as is the Department of Energy’s Energy Saver’s Booklet, which is at energysavers.gov.

Graham: Alright, thanks for joining us.

Kweller: Thank you.

Graham: Ronnie Kweller is with the Alliance to Save Energy. I’m Lester Graham.

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