If you’ve make energy-efficiency improvements to your home in 2009, you can claim a tax credit on this year’s tax return. Didn’t get around to make those home improvements in 2009? There’s good news. You have until December 2010 to stake your tax credit claim under the American Recovery and Reinvestment Act — President Obama’s stimulus bill.

Energy-Efficiency Credits
The energy-efficiency tax credits are available for air-sealing products, insulation, HVAC equipment, water heaters, windows, doors, and roofing. This tax credit must be on the homeowner’s primary existing home. While costs of installation as well as materials are covered, there is a maximum cap of $1500 on all work performed in 2009-2010.

Renewable-Energy Credits
The renewable-energy tax credits — credits for solar hot water systems, solar electric systems, ground-source heat pumps, wind turbines, and fuel cells — are separate from the energy-efficiency tax credits. The tax credits are good until 2016 and are available on second and even third homes. Up to 30% of the total installed cost can be claimed with no upper cap on the credit.

Most Bang For Your Buck
Despite the fact that there is no upper cap on the amount of your tax credit, if you install a wind turbine or solar panels, this may not be the most efficient use of your money. For instance, it could take 5-15 years to recoup the net cost of the installation of a solar panel system. Installation of fuel cells on cars are an equally poor return on investment.

According to the http://www.greenbuildingadvisor.com, the use of your tax credits involve the heating and cooling of your home. Surprisingly, replacing windows is not one of them, as “window replacement is almost never cost-effective, it could take 40 to 100 years to recoup the cost”.

• Air sealing. In almost all existing homes, the first energy-efficiency measure to perform should be air sealing. Not many homes in American can escape using some form of heating or cooling; most require both. Hundreds of dollars of wasted energy escape through door and window cracks every year.
• Insulation. Even if your house is sealed up like a drum, you are still going to lose cooling and heating if your house is not insulated properly. In order to receive the tax credit, the total ceiling R-values must be at least R-49 in climate zones 6-8; at least R-38 in zones 4-5; and at least R-30 in zones 1-3. (Click here to find your state on the climate zone map.)
• Air conditioning unit or heat pump. If your heating or cooling equipment is at least 15 or 20 years old, it may make economic sense to upgrade to more efficient equipment.

How do you know if your home could benefit from insulation, air sealing or replacement of air conditioning or heat pump? Have a home energy audit performed. Your utility company should offer one free of charge.

Do you disagree with our recommendations? Are you claiming the tax credit this year or plan to claim it next year? Tell us about it by leaving a comment!

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