Taxpayers who install products like energy-efficient windows, doors, insulation, roofs, and heating and cooling equipment in existing homes can receive a tax credit for 30 percent of the cost, up to $1,500, for improvements "placed in service" starting Jan. 1 through Dec. 31, 2010.
Wondering how to get power to that remote area of your property? Taxpayers who install solar energy systems including solar water heating and solar electric systems, small wind systems, and geothermal heat pumps can receive a 30 percent tax credit for systems placed in service before Dec. 31, 2016. There are no income caps for eligibility.
A complete summary of energy efficiency tax credits is available at www.energystar.gov.
It is true that the prospect of home renovation is a bit different than it was a decade ago when homeowners were tapping home equity with little worry and home prices were outpacing the cost of improvements. Today's lenders are a little more selective and the real estate market is slow. So while the tax breaks make energy home improvements very enticing, the first step is to make sure your financial house is in order.
Start with your credit report if you're considering borrowing. Even people with good credit behavior are under the microscope. Before you go to the bank check your credit report. By law you have the right to get all three of your credit reports for free by going to www.annualcreditreport.com. Stagger reports from Experian, TransUnion and Equifax throughout the year so you can catch potential errors in your report as they happen. For the most favorable terms and rates you need to get your credit score above 740 (the top credit score is 850). A bad credit score will increase the cost of your mortgage — if you're even able to get a loan.
Another consideration is to see what kind of payoff your chosen renovation will have. Remodeling magazine's annual Cost vs. Value report online (www.remodeling.hw.net) shows project averages for various regions. In today's market, renovate because you want to be eco-friendly, save on energy costs, or strictly for the enjoyment. It may not bring you a current profit.