The economic uncertainty we’re facing has many of us investing money into something we feel comfortable with– our homes. Home improvements generally pay off either financially or in comfort. If the upgrades boost energy efficiency, the expenditures can provide both comfort and return on investment.

Many people are not aware of new federal tax incentives for most energy efficiency work completed at your residence this year and next. The federal government will pay for 30 percent through the 2009 American Recovery and
Reinvestment Act—better known as the stimulus bill. The Internal Revenue Service (IRS) offers a personal tax credit of up to $1,500 for energy efficiency improvements made to existing homes during 2009 and 2010.

The credit covers 30 percent of the cost of adding insulation materials and exterior doors, windows, and roofs designed to help reduce a home’s heat loss or gain. It also includes efficient central air conditioners, air-source heat
pumps, hot water boilers, and biomass stoves.

For weatherization-related work the credit covers only the cost of materials. Heating, ventilation, and air conditioning systems, as well as biomass stoves installation costs also count toward the credit.

For example if you spend $1,000 on new insulation, you would receive $300 back in the form of a tax credit. If you spend $3,000 to purchase a new HVAC system and have it installed, you’d get a $900 credit.

To take advantage of the program, a home improvement must have taken place after Feb. 17, 2009 (the day the stimulus bill was signed into law), and products must meet specific energy efficiency criteria. For exterior windows and
skylights, rely on the Energy Star label. For other efficiency upgrades, request what’s called a “Manufacturer Certification Statement” that the product or component qualifies for the tax credit. Many manufacturers post the certifications on their websites, but you should verify that the product qualifies before making a purchase. You can also visit http:// www.irs.gov/recovery to review guidelines for eligible purchases.

Energy tax credits reduce taxes owed, dollar for dollar, and can be carried forward to following years. While they can help boost any refund you receive, you won’t receive a check directly for the credit amount. You can file for energy tax
credits using IRS Form 5695, with a total maximum value of $1,500 for improvements made in 2009 and 2010.

For suggestions on how you may make your home more energy efficient while taking advantage of these tax credits, please don’t hesitate to call one of our member service representatives at 218-829-2827 or 1-800-648-9401.

I’ll keep you informed. http://www.energystar.gov/index.cfm?c=tax_credits.tx_index