Time running out for energy tax credits

Time is running out if you want to save money on heating your home this winter. A new energy efficient furnace will save you some serious cash, but it doesn't end there.

You could get hundreds of dollars back in the form of energy tax credits, and not just for a new furnace. Other energy-saving home improvements come with tax credits too.

But the key is not to wait too long.

When it comes to making your home more energy efficient, there is no time like the present.

Consumer expert Angie Hicks of Angie's List said, "There are a number of tax credits out there for energy efficient home improvements to your home, but a lot of them are going to expire on December 31. So if you're thinking about making improvements to your house, now is the time to get it done. You could potentially replace your heating and air conditioning system, windows, doors."

A tax credit is a dollar for dollar reduction on the amount of tax you owe Uncle Sam. It's something to consider if you want to reduce your heating bill and the amount you owe the IRS next April 15.

"If you have a heating and air condition system it's going to last anywhere from 15 to 20 years. If you're at 15 years, now is probably the time to take advantage of replacing it because you can get up to 30 percent back on the system, up to $1,500, which could really help bring down the cost of buying a more efficient system. And then in the end you're going to save on your monthly bills as well. One Angie's list member said that he replaced his heating and cooling system earlier in the year and really felt he was getting some savings throughout the summer and is going to be able to take advantage of that tax credit," said Angie.

It is not just furnaces and air conditioners. There are credits for insulation, water heaters, roofing, windows and doors.

“Consumers need to do their own research into determining exactly what products are being covered by the tax credit. Also, whether installation is being included or whether it's just the actual product. Don't rely solely on the company you're hiring. Talk to your tax consultant as well because unfortunately we did hear from one Angie's list member who replaced her patio door, the salesperson said it was going to be covered in the tax credit, and it wasn't," Angie said.

When you file your taxes next spring, make sure you have your receipt and the signed statement from the manufacturer certifying the product qualifies for the tax credit.

When you file your state tax return, you can get up to a $100 tax credit from the state of Indiana for buying Energy Star rated appliances, water heaters and furnaces.

Michigan has a similar credit program. Just go either state's web sites for what's available.

Homeowners have until December 31, 2010 to buy qualifying items such as HVAC systems, water heaters, insulation, roofing, biomass stoves, windows and doors.

The credit is 30 percent of the cost of qualifying energy-efficient home improvements, up to a maximum credit of $1,500 for 2009 and 2010 combined. A tax credit is a dollar for dollar reduction on the amount of tax you owe.

A more energy-efficient model may cost more up front than a less efficient model, but you can recoup 30 percent of the cost through this tax credit, as well as the long term savings you'll see in your energy bills.

7 Money Saving Tax Credits:

HVAC Systems: Heating and cooling account for more than half the energy used in a typical home. If your heating or cooling unit is more than 10 years old, and 1. you have had substantial repair costs, it may be a good time to think about replacing.
2. Biomass Stoves: Biomass stoves burn renewable sources to heat a home or heat water. The stoves burn pellets made from wood, corn, straw and other agricultural resources. Many new stoves come with EPA-approved standards that burn off most of the polluting gases and increase your stove's efficiency by as much as 10 percent.
3. Insulation: A home should we well-insulated, from the roof to its foundation. If not, it could easily lose nearly half of its heating and cooling energy. How to tell if you need insulation? Look in your attic for exposed 2-by-4's. For the walls, find a spot, preferably in the closet where it's not seen, and make a small puncture hole with a wire. You should feel resistance and insulation. It's a good idea to have an energy audit done to determine areas in need of insulation.
4. Water Heaters: Water heating can account for up to a quarter of the energy consumed in your home. Maintained properly, water heaters will last for years and deliver gallon after gallon of hot water. But if your water heater is more than ten years old, it's probably operating at less than 50 percent of its efficiency.
5. Roofing: Industry experts say qualified roof products reflect more of the sun's rays; lowering the roof surface temperature by up to 100F, thus decreasing the amount of heat transferred you're your home. Curling, crackling and blistering of the shingles and/or a leaky roof are indicators that you need a new roof.
6. Windows: By replacing your windows you can expect a return on your investment of at least 80 percent. If you notice condensation and drafts on and around your windows, or rotting or warping frames, you might be in need of an upgrade.
7. Doors: The front door is a great way to increase curb appeal, and today's styles are more energy efficient. If your door is 15 years or older, splitting, or cracking - then it's likely time to replace.

Angie's List Buying Tips:

It pays to do your research: It's important for homeowners to research the credits for home improvement products before buying. Each item has its own requirements in order to qualify. For example, materials and labor are included in the tax credit for a biomass stove, but for insulation, its materials only. New construction and rentals are not eligible for the credit. A great place to start your homework online is through Energy Star .

Save for tax time: Homeowners need to save receipts and the signed statement from the manufacturer certifying the product qualifies for the tax credit with your records for tax time.

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