If you've ever thought about making your home more energy-efficient, our friends in Washington have just made the prospect more enticing -- by offering tax breaks.
This is a win-win deal. You often save money as you save energy, and you'll be able to claim some tax credits on top of it. Note that I said "credits" and not "deductions." Credits are far more valuable. They don't permit you to reduce your taxable income; instead, they reduce your tax bill, dollar for dollar. But let's get back to those energy-saving enhancements, shall we? Here are some of the new developments:
- Those who buy hybrid cars had been eligible for deductions of as much as $2,000. That tax break is now getting turbocharged and replaced with tax credits of up to $3,400. That makes it a good time to consider the Toyota
(NYSE:TM)Prius, the Honda (NYSE:HMC)Civic hybrid, the Ford (NYSE:F)Escape hybrid, GM's (NYSE:GM)Chevrolet Silverado hybrid, or the upcoming Nissan (NASDAQ:NSANY)Altima hybrid, among other similar vehicles.
- Folks who build an energy-efficient home in the next two years can receive up to $2,000 in tax credits. The money will reward those who focus on energy-saving windows and doors, special insulation materials, and the like. This rule applies to traditional single-family homes, mobile homes, and more.
- If you already own your own home but make it more energy-efficient, you can collect up to $500 in tax credits. Again, the upgrade needs to happen within the next two years. Things you might do to improve your home's energy efficiency include beefing up your insulation, getting special doors and windows, and replacing heaters.
- There are even provisions for improving commercial properties and reaping tax benefits of up to $1.80 per square foot.
- There's a tax credit available that's valued at 30% of the cost of photovoltaic equipment and solar water heaters, with a cap of $2,000. Solar heating of swimming pools doesn't qualify.
Is there any downside to all this generous goodness? Yes, of course. It's complexity. With some of these breaks, it's hard to determine exactly what you qualify for. In such cases, if you're really stumped, consider consulting a professional. (We can help you find a good advisor -- and we offer an inexpensive advisory service of our own.)
So when can you begin reaping these enticing rewards? Hold off a little. The changes should begin in January. And don't dilly-dally -- many of these new rules will expire in 2008. Get more details on these developments from the horse's mouth, at www.IRS.gov.
And find great tips on buying and selling homes by visiting our Home Center, which also features some special mortgage rates. Learn more about buying, selling, and maintaining a home by reading these articles:
- Buying a House Is Easy!
- The Right Real Estate Agent
- Make Money as a Landlord
- A Mover's Survival Kit
- 10 Things to Know About Mortgages
- 10 Home Enhancement Tips
If you're interested in companies profiting from energy-efficient vehicles and equipment, read these articles:
- Nathan Parmelee: The Hybrid Invasion
- Stephen Simpson: A Healthier Glow for Nuclear Power?
- Timothy Otte: GE's Green Growth Strategy
Longtime Fool contributor Selena Maranjian does not own shares of any companies mentioned in this article.