Tax-credit program grows for consumer purchases

Hartford Courant

Is your water heater or oil furnace an energy glutton? There’s hope — even better than hope, federal tax credits — if you replace it with an energy-efficient product.

The American Recovery and Reinvestment Act of 2009, the same federal stimulus program that produced the “cash for clunkers” program, provides tax credits to consumers who buy qualifying energy-efficient products, including insulation, storm windows and metal and reflective asphalt shingles.

Buying new windows and doors? Replacing an old water heater with a solar-powered water heater? Putting a new roof over your head? You may be eligible for a tax credit equal to 30 percent of the cost of materials, as much as $1,500 for qualifying products placed into service between Jan. 1, 2009, and Dec. 31, 2010.

And the best part about this “clunker” program is that you don’t have to physically trade in your old drafty windows or central-air conditioning unit. Just save your purchase receipts and the Manufacturer Certification Statement.

Here’s how it works:

A tax credit reduces the amount of taxes you owe. For example: If you owe $2,000 in federal taxes, a $1,500 refundable tax credit would lower your bill to $500.

In most cases, qualifying home improvements must be made to your primary residence. In some cases, you may receive tax credits for improvements to a second home.

In some cases, not only is the product eligible for a tax credit, but the installation costs also are covered by the program. If they meet the criteria, the installation of heating, ventilation and air conditioning systems, biomass stoves, water heaters, solar panels, geothermal heat pumps, wind energy systems or fuel cells are covered by the tax-credit program. The tax credit is 30 percent of the total cost (the product plus installation), up to $1,500.

Installation costs are not covered by the tax credit for roofs, insulation, windows or doors.

And if you can’t make the improvement this year or next, remember that some tax credits are available until 2016 — at 30 percent of the cost, with no upper limit — for geothermal heat pumps, solar panels, solar water heaters, small wind-energy systems and fuel cells.

For a complete list of restrictions and requirements, go to www.energystar.gov/taxcredits.