July 24, 2007
With rising energy costs, many homeowners are seeking ways to cut their power costs. I want to make you aware of available tax credits that you may be able to claim on your income tax return for energy efficiency improvements made to your home in 2006 or 2007. A credit is much better than a deduction because you get that total amount directly subtracted from your tax obligation. Here's what is available:
Up to a $ 500 credit for doing qualified energy efficiency improvements to your home. Items that may be eligible include insulation systems that reduce heat loss or gain, exterior windows and doors, specially coated metal roofing that keeps the heat out of your home, water heaters, geothermal heat pumps, central air conditioners, furnaces and fans.
Up to a $ 2,000 credit for qualified investments in a solar panel system and another equivalent credit for investing in a solar water heating system at your home. No part of the system can be used to heat a pool or hot tub.
Use Form 5695 , found at http://www.irs.gov/pub/irs-pdf/f5695.pdf, to figure and take your tax credits for energy efficiency improvements. Instructions and details about qualifications can be found in the form. The amount of the tax credit calculated in Form 5695 is then entered on line 52 in your 1040 tax return (based on 2006 Forms; check for any changes with the 2007 Forms).
When shopping for products that qualify for the credit look for a Manufacturer's Certification Statement in the packaging or on the product website to see if it qualifies for the energy efficiency tax credit. Keep this statement and receipt for your records.
By making your home more energy efficient, you will reduce your utility bills and your federal taxes and cut pollution by reducing the need for new power plants.
Check out the City's Power to People web site, http://www.houstonpowertopeople.com for additional information about energy efficiency and conservation ideas. Let's make Houston a leader in energy conservation and efficiency!