- The tax credit has been bumped up to 30% from 10%.
- The $200 credit cap on new windows has been taken out. (Good thing, unless you're replacing one window that's a foot square in size.)
- The maximum credit you can receive for a year has gone up from $500 to $1,500. However, if you're making expensive improvements like adding a geothermal heat pump, a solar water heater or solar power cells, you can take a credit for a full 30% of the cost.
If you can't afford to sell your home and you've got money set aside for remodeling, there's good news for you, thanks to the Feds. The massive Recovery and Reinvestment Act signed by the president this month to help boost the economy contains tax credits that can benefit your 2009 or 2010 returns. There were credits for making energy-efficient upgrades to your home this year, but the new law increases their benefits and extends them into 2010. For instance:
Insulation: $3,000 to $7,000, depending on the size of the home and the type of insulation used. (It has to meet 2009 standards.) Also, the primary purpose of the product needs to be insulation. You can't put new siding on your home, even though it may have insulating properties, and take the credit. Air conditioner/furnace: About $4,000 and up for a central air system, depending on the size of your home. You need to meet specific energy-saving guidelines to get this credit. Water heater: $700 to $1,500, depending on the model and your needs. To get the credit, the new heater has to say somewhere in its documentation that it has "an energy factor of 0.82 or a thermal efficiency of at least 90%." Solar electricity panels: $25,000 to $75,000, based on your roof size and how many watts you need. An expensive upgrade, but remember this is one that qualifies for a "super" credit. Put a $50,000 solar system on the roof this year, and you'll qualify for a credit of $15,000 on next year's tax return.