Upgrade and Save with Tax Credits

Under the Energy Policy Act of 2005 (EPACT), homeowners who make energy-related improvements in 2006 and 2007 may qualify for tax credits. Products covered include:

*Exterior windows and skylights

*Main air circualating fans

*Exterior doors

*Central air conditioners

*Gas, oil and propane furnaces ad hot water boilings

*Air-souce and geothermal and heat pumps

*Certain roofing materials

*Storm windows

*Certain water heating equipment

*Insulation

In order to qualify, products must meet standards set by the IRS for each product type. Most credits are based on a perecentage of product cost excluding installation, whereas for heating system components flat credit apply. Only improvements to a primary residence qualify, and they must be made between January 1, 2006 and December 31, 2007. Homeowner tax credits for the tax years 2006 and 2007 combined are capped at $500.

Homeowners can harness the sun's energy for even larger tax credits. Credits of up to 30 percent, capped at $2000, are avaliable for qualifying photovolataic systems, fuel cells and solar water heating systems. For the latter, only solar coponents and not the entire water heating system can be claimed. The solar heated water must be used within the residence. No such luck with getting the IRS to heat your hot tubs and swimming pools. Qualified systems must be placed in service between January 1, 2006 and December 31, 2008.

As always, consult a tax professional regarding IRS regualtions. FOr a general summary, go the www.energystar.gov or ww.energy.gov/taxbreaks.htm.

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