Tip of the Day: Don't delay when planning an energy-efficient home improvement

Consumer Reports News: April 21, 2010 03:31 PM

With all the work that goes into undertaking a home improvement—planning, financing, hiring a certified contractor, and getting a permit, not to mention the inevitable delays and problems you'll face—your project to boost the energy efficiency of your home will likely take a lot longer than you'd expect. So don't delay if you want to take advantage of the federal tax credits for energy-efficient home improvements, since many of the credits will expire by the end of 2010.

Combine incentives
Pairing a federal credit with state and local utility incentives can save you even more. If you're planning to install an air-conditioning system now, for instance, combine the 30 percent credit for split-ductless and central-air systems with state and local utility incentives and cash for appliance rebates. Also look for the biggest payback. The last column of the chart on this page provide estimates of annual savings.

Mind the $1,500 cap
For the entire 2009-2010 period, you can't claim more than a total of $1,500 in federal tax credits on improvements. If you're getting the full $1,500 tax credit in 2009, you are not eligible for a tax credit on these products in 2010.

You can, however, combine the credits expiring in 2010 with those that are running until 2016 for geothermal heat pumps, solar water heaters, solar- and wind-energy systems, and fuel cells. Visit this page from the U.S. Department of Energy's EnergySavers.gov for specifics on the credits.

Consider the type of residence
Only primary residences qualify for some federal credits. This Energy Star page and IRS podcast provide details about the credits for primary, rental and vacation properties. Not following the guidelines could turn the results of your home-energy audit into the kind of audit you don't want to encounter.

Keep performance criteria in mind

You don't want to invest in a product or system that ends up not being eligible for a tax credit, so check this page before shelling out any money. A solar water heater, for instance, must generate more than half of a residence's hot-water needs. For roofing, only Energy Star-qualified metal roofs and asphalt shingles with reflecting granules are eligible for a credit.

—Gian Trotta

Essential information: Learn more about energy efficiency on our Energy Saving & Green Living Guide and use the advice on our Home Remodeling & Improvement Guide. Read up on the latest cash for appliances news and stay on top of rebates and incentives by following us at Twitter.com/CRHomegarden.

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Tip of the Day: Don't delay when planning an energy-efficient home improvement

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