TAX CREDITS FOR IMPROVING
ENERGY EFFICIENCY OF EXISTING HOMES
Excerpted from ?Treasury and IRS Provide Guidance for Energy Credits for Homeowners?
(Notice 2006-26) IR-2006-34, Feb. 21, 2006 and Form 5695 Instructions
A recent tax law change provides a tax credit to improve the energy efficiency of existing homes. This includes condominiums and cooperatives. If you are a unit owner in a condominium association or shareholder in a cooperative housing corporation, you are treated as having paid your proportionate share of any costs of such association or corporation. During 2006 and 2007, individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns. Manufacturers offering energy efficient items such as insulation or storm windows can assure their customers that their energy efficient items will qualify for the tax credit if certain energy efficiency requirements are met. These items must be placed in service after December 31, 2005 and before January 1, 2008.
Qualified Energy Improvements
The law provides a 10
percent credit for buying qualified energy efficiency improvements. To qualify,
a component must meet or exceed the criteria established by the 2000
International Energy Conservation Code (including supplements) and must be
installed in the taxpayer?s main home in the United States.
The following items are eligible:
Residential
Energy Property Expenses
In addition, the law provides a credit for costs relating
to residential energy property expenses. To qualify as residential energy
property, the property must meet certification requirements prescribed by the
Secretary of the Treasury and must be installed in the taxpayer?s main home in
the United States.
The following items are eligible:
- $50 for each advanced main air circulating fan
- $150 for each qualified natural gas, propane, or oil
furnace or hot water boiler
- $300 for each item of qualified energy efficient
property
The maximum credit for all taxable years is $500 ? no more than $200 of
the credit can be attributable to expenses for windows.
FOR MORE INFORMATION
View these links on the IRS web site:
