Now Is Time For Energy Tax Breaks

Labor Day has come and gone, and summer is unofficially over. Retailers are starting to dust off Christmas decorations, and colder weather will be here all too soon.

Energy costs are at historic highs, and the weak economy makes the problem even worse. Fortunately, the IRS is offering some relief in the form of tax credits. But you can't claim the credit for 2009 if you don't act soon, so this may be a great time to improve your home or business property.

For 2009 and 2010, you can claim a 30% credit, up to $1,500 total, for the cost of buying "qualified" energy efficiency improvements you install in your primary residence. These include:
qualifying exterior windows and skylights (meeting specific "U-factor" and "Solar Heat Gain Coefficient" ratings) qualifying exterior doors qualifying insulation certain metal and asphalt roofs (meeting specific ENERGY STAR requirements) qualifying heating and cooling systems
non-solar water heaters, and biomass stoves.

If you're slightly more ambitious, you can claim one credit equal to 30 percent of the qualified investment in a solar panel, and another equivalent credit for investing in a solar water heating system. (Sorry, there's no credit for systems you use to heat your swimming pool or hot tub!) That credit was limited to $2,000 for 2008, but is not capped for 2009 and beyond. You can also use this credit to offset the Alternative Minimum Tax.

Finally, if you own your own business, you can deduct up to $1.80 per square foot for investments you make in "energy efficient commercial building property," placed in service through December 31, 2016, and designed to save at least 50% of the building's heating, cooling, and water heating costs, and interior lighting costs. (Deductions for energy efficient lighting systems are limited to 60 cents per square foot.)

They say it's the thought that counts. Well, the thought here is simple. Energy is expensive, and fossil fuels are getting scarce. Uncle Sam wants us to conserve, so he's offering tax breaks for energy efficiency.

But the rules here can be tricky. What qualifies? When does it have to be installed to qualify? So don't hesitate to call us with questions before you renovate or improve.