Tax credits for home improvements through year-end 2010

energy-starCHEAPSKATE PAM here. Be sure you know about all the tax credits you can get for home improvements now through the end of 2010. All part of our economic recovery and energy efficiency programs, potentially good for the environment and good for the pocketbook, too, if played correctly.  Money smart because (1) you can save a lot of money directly off your tax bill, offsetting the cost of the improvements by up to 30%, and (2) you can cut your energy bill, especially if you choose improvements whose energy payback is better than the up-front costs. This latter issue can be tricky, though.

I cannot claim to be an expert on which investments to make, if at all, or in which order. But I have some opinions based on my own research and triangulations about what to invest in to save on money and energy, truly. My thoughts:

  • Insulate your attic and walls. From all that I have read, having proper, maximum insulation can deliver the #1 payback in money and energy savings in a house, period.
  • New windows? The payback is controversial (see this post). Exterior storms may be a better place to put available cash, first. I am going to check this out for my house here in the land of six-month winters.
  • New storm doors? I think this might be smart for winter-ites.
  • New roof — if you need one, this sounds like a great program to offset some of the expense.
  • If you need a new water heater or air conditioning system, this could be a good incentive to make the purchase. Old water heaters can be energy wasters, so you might want to look at the options even if you think your behemoth has a few good years on it; these babies can be insulated too although I don’t know if that cost can earn a tax credit.
  • See the EPA website (link below) for the full list of options.

Most of the investments above deliver a 30% tax credit, up to $1500 maximum back.  Note, a tax credit is a direct write-off/reduction/cut of actual taxes owed on the bottom, final line of your tax return. (A tax deduction is a reduction to your top-line gross income, the very first number you plug in before you then start figuring out your taxes owed.)

If you are interested in installing solar panels – there is no limit to the tax credit. With this technology,  I would just advice, be sure you do the calculations on pay-back time considering various scenarios for utility prices and the life expectancy and maintenance costs of the solar panels. I’m guessing this payback will be very dependent on the climate where you live.

Another important note: A Manufacturer’s Certification Statement also is required for all these purchase.

Three no-cost energy saving tips from my arsenal:

  • Use your window treatments. Close off the hot summer sun, then reopen the shades/drapes and windows when the sun goes down to re-cool the house naturally. Some idea in winter: Let the sun in to warm the house in the daytime, but shut those drapes fast when the sun goes down to preserve heat.
  • If you’re in a bloody hot climate and are specifying a new roof — choose a light color. Stuff I’ve read online says this can cut energy costs dramatically.
  • Run your dishwasher at night, when there is less demand for energy. Not sure if it will cut your bill, but it’s good for the grid.

The EPA’s website on the program seems pretty informative – be sure to check it out fully and save some money on the renovations you need or may already have under way.


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  1. says

    Great reminder, thanks!

    Also- strategic tree planting!

    Many of us with old ranch houses enjoy old tree growth, and the deciduous trees around my house keep it cool in the summer and will allow the solar heat to warm it up in the winter.

  2. Elizabeth Mary says

    This probably doesn’t qualify for any tax credits, but I am looking forward to a cooler house and some savings on my AC bill with the new awning going up over my back patio. Not only will it make the patio useable during mid-day, but it will block sun from the large French window in the dining room. And, if it works as expected, I will consider putting awnings on the front windows that get morning sun.

    The awning was just ordered this week and I was surprised to find out that it is considered a capital improvement so there is no sales tax, and that saved a few hundred dollars.

  3. says

    There may also be state or local tax incentives for energy-efficient upgrades: We got an Oregon Energy Efficiency Alliance cash refund of over $1400 when we insulated our attic two years ago. That was over and above the federal tax credit.
    A good place to get more info: your local utility companies.

  4. Elaine says

    Darn, we already have done all that stuff in the last five or six years, new roof, new windows, new furnace, insulation. I can’t sing the praises of insulation enough, it makes things so much better. No chilly corners in the living room/office, lower heat bills. We are lucky with trees to shade us in the summer, so we don’t need the AC much. We have a whole house fan in the ceiling at the top of the stairs, original to the house, and that does the best job of cooling the place off at night. We had to replace the 12 hour mechanical timer, and found one at Grainger with the exact same kind of cover plate only in dull nickel instead of dull brass. The knob was more modern looking and the old one won’t fit, unfortunately. It was very hard to find a mechanical timer. Grainger had the best selection. Maybe we could get more energy efficient appliances, but to me, you lose more by putting something perfectly serviceable into the landfill.

  5. vacationbarbie says

    My house has been upgraded with insulation in the walls, floor joists and attic by the previous owner. I had someone give me a quote for windows the other day. I could split it into two segments….do the front of the house first, then the back. I only have one large tree, but they planted it 5 feet of the patio and it’s starting to heave and crack the patio. Why didn’t they plant it 10 feet further into the yard?!?!

    It does get cold through the single pane windows, but I’m actually more interested in the noise control. My lot is close to the lot line on one side….and the neighbor’s driveway. I can hear them coming and going everyday.

    The only downside is….I really love how my windows look on my house. But, the caulking is starting to come off in chunks after 50+ years. On the upside, I could use the tax credit!

  6. Lara Jane says

    Most of my “old house” experience comes from buildings that are 80 years old, not 50. In that case, it makes the most sense to keep those old windows. Old-growth wood and wavy glass aren’t easy to come buy; you’re better off — financially and aesthetically — keeping those old windows.

    However, I’m new to the MCM stuff, so I’m not sure about the quality of the windows of the era. Our current house was built in 1968 and has wood Anderson awning windows. The wood is rotted in many places (particularly on the north side of the house) and there is moisture between the double panes and the crank-out levers are broken or bent on many of the windows. I know some of this — probably much of it — is reparable, but the house had already been totally remodeled by the time we purchased it in 1998, so I don’t know whether it’s “worth” keeping the windows.

    We’re going to be listing the house soon and “updates” like vinyl windows seem to be de rigueur for getting a decent price. Vinyl siding, too, but we’re not going there!

    I don’t know what to do!

  7. Missouri Michael says

    vacationbarbie – I really liked the look of the original windows on my house but needed new windows. Some window companies will allow you to custom order grilles in the windows. This was a major requirement of mine when I was looking for new windows – I wanted to retain that original look. I live in a small town so I really wanted to keep my money somewhat local, not bring in a company from 40+ miles away. I found that there is a Pella dealer in my town and after looking into Pella windows discovered that I could custom order my windows like I wanted. There was a fee of $9 per sash ($18 per window) for the custom grilles. I have 10 windows in my house and felt like the additional cost was minimal to be able to maintain original appearances. I did have to upgrade from vinyl windows to fiberglass Impervia windows, which added a good amount to the cost (I could talk about how wonderful I think they are all day – much stronger than vinyl windows). Anyway, my point is that if you shop around you can find a way to upgrade to a new more efficient window and still maintain the original look of you house. I am sure that there are other companies that offer custom grilles as well, I only worked with Pella because there was a local dealer and I wanted a window from a company with a good reputation. Good luck!

  8. Russell says

    A solar hot water heating system also will qualify for the 30% tax credit with no limit through 2016. These systems are typically more efficient at turning the suns radiant energy into usable energy (hot water) as opposed to electricity with a solar panel. The investment return period is also less. We made the change from oil to gas replacing the noisy, dirty, inefficient oil burner with a 95% efficient condensing gas boiler. The best part is that I don’t have keep changing the volume on the TV in our downstairs rumpus room like I did every time the old oil burner kicked on. We got a $1300 rebate back through a local program and expect to qualify for the $1500 credit. We could not afford the whole solar hot water system now so we installed a solar “ready” hot water heater and hope to put the solar water panels up on the roof sometime before 2016 when the program runs out.

    • pam kueber says

      Hi Russell, I haven’t heard from you in a while. Thanks for the info on the solar water heater and for sharing your experience. From what I am reading, the water heaters that deliver on demand are a big step forward. Apparently there is a way to insulate your existing water heater in a way that saves a goodly amount of energy, and there’s also advice to set the temp down to a number that also conserves a lot of energy. Anyway, nice to hear from you, and hope all is going well with you and your house built by Seabees.

  9. nina462 says

    But what do you do when you hate the windows you’ve put in because they’re not period? Yes, there are fine and are perfect-but not like the originals. (as I’ve mentioned before the originals are in the basement for when I win the lottery and can put them back in!).

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