[StBernard] Energy Tax Credits

Westley Annis westley at da-parish.com
Thu Feb 23 10:44:07 EST 2006



Hey Westley
With most St. Bernardians buying and fixing homes, building new homes, etc
there are tax credits if you make your home specifically energy efficient.
Please pass on this IRS guidance on that issue. Thanks, Westley.

Dan Johnson, CPA
dan at danjohnsoncpa.com




Treasury and IRS Provide Guidance for Energy Credits for Homeowners

IR-2006-34, Feb. 21, 2006

WASHINGTON - The Treasury Department and the IRS today have issued guidance
(Notice
2006-26) on the certification that homeowners may rely on when they claim
credits for purchases that make their homes more efficient.

During 2006, individuals can make energy-conscious purchases that will
provide tax benefits when filling out their tax returns next year. The
credit will also be available for purchases in 2007. Manufacturers offering
energy efficient items such as insulation or storm windows can assure their
customers that their energy efficient items will qualify for the tax credit
if certain energy efficiency requirements are met.

A recent tax law change provides a tax credit to improve the energy
efficiency of existing homes. The law provides a 10 percent credit for
buying qualified energy efficiency improvements. To qualify, a component
must meet or exceed the criteria established by the 2000 International
Energy Conservation Code (including
supplements) and must be installed in the taxpayer's main home in the United
States.

The following items are eligible:

. Insulation systems that reduce heat loss/gain

. Exterior windows (including skylights)

. Exterior doors

. Metal roofs (meeting applicable Energy Star requirements).

In addition, the law provides a credit for costs relating to residential
energy property expenses. To qualify as residential energy property, the
property must meet certification requirements prescribed by the Secretary of
the Treasury and must be installed in the taxpayer's main home in the United
States.

The following items are eligible:

. $50 for each advanced main air circulating fan

. $150 for each qualified natural gas, propane, or oil furnace
or hot
water heater

. $300 for each item of qualified energy efficient property.

The maximum credit for all taxable years is $500 - no more than $200 of the
credit can be attributable to expenses for windows.

Additionally, the new law makes a credit available to those who add
qualified solar panels, solar water heating equipment, or a fuel cell power
plant to their homes in the United States. In general, a qualified fuel cell
power plant converts a fuel into electricity using electrochemical means,
has an electricity-only generation efficiency of more than 30 percent and
generates at least 0.5 kilowatts of electricity. Taxpayers are allowed one
credit equal to 30 percent of the qualified investment in a solar panel up
to a maximum credit of $2,000, and another equivalent credit for investing
in a solar water heating system. No part of either system can be used to
heat a pool or hot tub.

Additionally, taxpayers are also allowed a 30 percent tax credit for the
purchase of qualified fuel cell power plants. The credit may not exceed $500
for each .5 kilowatt of capacity.

These items must be placed in service after Dec. 31, 2005 and before Jan.
1, 2008.






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