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Seal in new tax credits for home energy costs

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in Small Business Tax

Thanks to a new law passed last year, you can take a lifetime tax credit up to $500 for the cost of energy-efficient improvements to your home. The key word is credit, which is a dollar-for-dollar reduction of your tax bill—much better than a simple deduction.

Advice: Get it while it’s hot. You have only two years—2006 and 2007—to make energy-saving improvements to your home that qualify for the tax credit.

The IRS just released new blueprints that clarify how you can claim this tax break. The IRS notice also adds several key provisions that you should know about. (IRS Notice 2006-26)

Here’s the whole story: The 2005 law said that homeowners can claim the energy tax credit (also called the Section 25C credit) for qualified home improvements that are placed in service after Dec. 31, 2005, and before Jan. 1, 2008.

The two-part credit equals 10 percent of the cost of energy-efficiency improvements to the “building envelope,” pl...(register to read more)

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