$500 Lifetime Energy-Savings Home Improvement Tax Credit
If you place qualified energy-savings property in service with respect to your “principal residence” in 2006 or 2007, you can qualify for a credit of up to $500. The $500 is a lifetime limitation, not an annual limitation. In addition to the overall $500 lifetime limitation, there is a $200 lifetime limit for energy-saving windows; a $50 limit for advanced main air circulating fans; a $150 limit for any qualified natural gas, propane, or oil furnace or hot water boiler; and a $300 limit for energy efficient electric heat pumps, water heaters, and central air conditioners. Also, some expenditures qualify dollar-for-dollar for the credit (e.g., qualified energy-efficient advanced main circulating fans, hot water boilers, and heat pumps) while only 10% of each dollar spent toward other improvements qualify for the credit (e.g., qualifying energy-efficient exterior windows, doors, metal roofing). To determine whether your energy-efficient home improvements qualify, IRS says that you can generally rely on:
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A written manufacturer’s credit certification contained in the property’s packaging, or
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A certification in printable form on the manufacturer’s website. Also, exterior windows or skylights that bear the Energy Star label are qualifying property, if installed in the region identified on the label.
Please Note: For 2006, the maximum $500 energy-savings credit will offset both the AMT and regular tax. If you are considering the purchase of this type of energy-efficient property for your home and you think that you might be subject to AMT in 2007, you should purchase and place the property in service by December 31, 2006. Unless Congress changes the law, the $500 credit will not offset AMT in 2007.
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