Green tax breaks that can improve your home and wallet

Windows and materials to help you seal them are among the items that are covered through the federal tax credits geared to make homes more energy efficient.

From windows to wind turbines, tax credits give homeowners an extra incentive to make energy-efficient home improvements.

The sweet deals of 2010 — where homeowners could receive a maximum tax credit of $1,500 — are gone. The tax laws for 2011 reverted to the incentives of 2006 and 2007, which cover up to 10 percent of the cost of improvements with a $500 cap. For certain kinds of improvements, such as windows, heaters and air conditioners, the maximums are lower, according to the U.S. Department of Energy.

While it’s not the $1,500 of 2010, local energy auditor Sarajane Koch of Scott Temperature said it does help. For instance, the $500 limit can be met through a $300 tax credit for an air conditioner, a $150 tax credit for a furnace and a $50 tax credit for circulating fan.

In the past 15 months, Koch said she saw more homeowners go with higher efficiency models because the $1,500 tax credit helped cover the difference.

The $500 lifetime limit doesn’t apply to all energy-efficiency projects. The more costly improvements of installing geothermal heat pumps, solar water heaters, solar panels, fuel cells and wind generators are eligible for a 30 percent tax credit and have no upper limit. These credits are good until 2016.

That’s good news, Koch said because projects such as installing geothermal heat pumps can cost between $15,000 to $40,000.

All of the housing credits are for equipment that is installed and used in 2011. And the upgrades have to be made for the homeowner’s principal residence and can’t be applied to rental properties. There is also a $500 lifetime limit on the tax credit. So, if you took full advantage of last year’s $1,500 tax credit, you won’t be eligible.

The tax credits also don’t include installation and labor costs.

With the help of information from the DOE, we made a cheat sheet on what tax credits are available for 2011.

Windows, doors, skylights

Homeowners can get up to 10 percent off the cost of the windows, skylights and doors that carry the ENERGY STAR label. The credit is good for up to $200 of the cost of windows and skylights and $500 for doors. To qualify, not all the windows, doors or skylights in your home have to be replaced and they don’t even have to be replacements for old ones, so products that are used on additions would qualify.

Insulation, weather stripping

Tax credits are available for 10 percent of the cost of insulation or weather-stripping products with a $500 cap. The tax credits cover typical insulation products such as batts, rolls, blow-in fibers and expanding sprays. It also covers weather-stripping materials, cans of spray foam, caulking and house wrap. Homeowners can get the credit if they install the insulation or do the air sealing themselves.

Water heaters

A $300 tax credit is available for water heaters that have an energy factor of .82 or a thermal efficiency of at least 90 percent. The DOE has a list of tankless water heaters that qualify. There aren’t any residential storage tank water heaters or gas condensing water heaters on the market right now that qualify for the tax credit.

There is also a $300 tax credit for electric heat pump water heaters that have an energy factor of 2.0. Electric storage tanks and electric tankless water heaters do not qualify.

Furnaces and boilers

A $150 tax credit is available for furnaces and boilers that have an annual fuel utilization efficiency rating (AFUE) of 95 or greater. The DOE doesn’t have a list of all the heating products that qualify for the tax credit, but the Air-Conditioning, Heating and Refrigeration Institute keeps track of products that do. You can search its website.

There is also a $300 tax credit for air source heat pumps and a $50 tax credit for an advanced main air circulating fan.

Central air conditioners

A $300 tax credit is available for central air conditioners, but you will most likely have to replace your furnace as well to qualify. The DOE doesn’t have a user-friendly list of what central air conditioners qualify, so the best way to find out what earns a tax credit is to check with your contractor.

Biomass stoves

Stoves that use biomass, such as trees, wood, grass or agricultural crops, can earn a $300 tax credit. The stove must have a thermal efficiency rating of at least 75 percent.

Roofs

Homeowners can receive 10 percent of the cost of a new roof. The tax credit is capped at $500. The tax credit is aimed at reflective roofs, which are best used for homes that are in hot sunny climates and use air conditioning frequently.

What’s not covered

Here’s a list of what isn’t covered under the government’s tax credits: ceiling fans, washers, dryers, compact fluorescent light bulbs, dehumidifiers, dishwashers, electric furnaces and boilers, swamp coolers, lighting fixtures, ovens, programmable thermostats, refrigerators, room air conditioners, TVs and toilets.