It pays to winterize, IRS says

People can now weatherize their homes and be rewarded for their efforts, according to information released by the Internal Revenue Service.

Homeowners making energy-saving improvements this fall can cut their winter heating bills and lower their 2009 tax bill as well, said Michael T. Devine, IRS media relations.

The American Recovery and Reinvestment Act, enacted earlier this year, expanded two home energy tax credits: the nonbusiness energy property credit and the residential energy efficient property credit.

This credit equals 30 percent of what a homeowner spends on eligible energy-saving improvements, up to a maximum tax credit of $1,500 for the combined 2009 and 2010 tax years, he said.

The cost of certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass all qualify, along with labor costs for installing these items.

In addition, the cost of energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs also qualify for the credit; the cost of installing these items does not count.

By spending as little as $5,000 before the end of the year on eligible energy-saving improvements, a homeowner can save as much as $1,500 on his or her 2009 federal income tax return, Devine said.

Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

Homeowners going green should also check out a second tax credit designed to spur investment in alternative energy equipment, Devine said.

The residential energy efficient property credit, equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property.

Generally, labor costs are included when calculating this credit. Also, no cap exists on the amount of credit available except in the case of fuel cell property.

Not all energy-efficient improvements qualify for these tax credits.

For that reason, homeowners should check the manufacturer?s tax credit certification statement before purchasing or installing any of these improvements.

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