by Kira Botkin

Making your home energy efficient won’t just save you money on your monthly utility bills – in some cases it can save you money on your taxes too.

If you remodeled your home last year and made it more “green,” make sure you check out these nine federal energy tax credits. And even if you didn’t, it may be something to put on your to-do list for this year. You’ll save a bundle.

1. Fuel Cells

Welcome to the future! Fuel cell systems are the newest clean energy technology, converting stored fuel into electricity and/or heat. They provide a significant reduction in the amount of carbon dioxide your home produces, thus shrinking the carbon footprint to about one-third of a normal home. Fuel cells systems can be expensive to install, so to help offset the cost, you can take a credit for installing it in your primary residence, whether it’s new or old construction, at 30% of the cost, up to $1,000 per kilowatt of power generating capacity.

2. Solar Energy Systems

If you’ve got sun to spare, a solar water heater or photovoltaic system might be the ticket to lower energy costs and serious green-cred. Installing a solar system allows you to take a credit of 30% of the cost, with no upper limit. All EnergyStar rated solar water heaters will qualify for the credit, as long as you’re using them for home water needs (as opposed to for an outdoor swimming pool). Solar photovoltaic systems must provide electricity for your home and meet local electrical and fire codes. And as a nice bonus, the cost of installing the system is also included, so you get a credit for 30% of the cost of both the actual physical parts and also the installation costs. Since this system will save you big in the future, it’s a great time to jump on the solar bandwagon!

3. Residential Wind Turbines

Perhaps you’re short on sun but have an oversupply of windy days? You could install a small wind turbine to generate free electricity for your home. You can install one at your primary or secondary home, whether it is new or old construction, but not on rental property. Also, the capacity must be under 100 kilowatts, since it would be difficult for most homes to use that much electricity. This tax credit is worth 30% of all parts, labor, and installation costs.

4. Home Upgrades

You are limited to $1,500 in tax credits on these items between 2009 and 2010 – so if you took any credits for these items in 2009, you’ll need to

subtract that credit from the $1,500 limit to see how much you can take for the 2010 tax year. But if you didn’t use any last year, the full $1,500 is available to you for 2010. For 2011, the law has reverted back to 2006 levels, so for 2011 on there is a $500 lifetime limit on home upgrade purchases. The credits for the more advanced HVAC systems outlined below are not affected. Items must have been installed and ready on December 31st, 2010 in order for you to deduct them on your 2010 taxes, even if you purchased the item in 2010 but installed it in 2011. Generally, the company that sold you the products should be able to tell you whether the item will qualify for the tax credit. Credit for these upgrades is only available for existing homes, and doesn’t include new homes or rentals.

5. Windows, Doors & Skylights

Replacing a window in your home? Make it energy-efficient and get a tax credit for 10% of the cost, up to $200 per window. Doors and skylights get 10% of the cost up to $500 per item. You can replace as many as you like. Only the cost of the actual item is included – no labor costs are included – but you can buy as many as you like. They must be EnergyStar rated in order to claim the credit. Your window salesman should be able to tell you if they qualify.

6. Non-Solar Water Heaters

Not ready to go solar, but still need a new water heater? Get an energy-efficient water heater and get a tax credit for up to $300 of its cost. (If the water heater cost less than $300, you can only get a credit for its actual cost.)

7. Metal or Asphalt Roofs

Ever gotten into a black car on a hot day? Imagine how your house feels in the summer. Paint your metal roof with an approved reflective paint, or use approved reflective granules on your asphalt roof, and your home’s temperature will go down along with your tax bill. You can get a credit for 10% of the cost, for up to a $500 credit. Installation costs are not included.

8. Insulation

Adding extra insulation to your home is cheap, quick, and very effective at lowering your heating and cooling bills. All sorts of different insulation products can be claimed as part of the credit – from the typical pink-stuff-on-a-roll to spray-in insulation that gets blown into the spaces in your walls, even spray foam in a can or weatherstripping you install in your doorjamb or windows. You can get a credit for 10% of the cost of the insulation, not including labor or

installation costs, up to $500.

9. HVAC Systems & Upgrades

Here’s where you can really rack up the credits! Your heating and cooling systems are significant consumers of gas and electricity in your home, so improvements to their efficiency will save you a bundle of cash while saving the environment at the same time.

• Advanced main air circulating fan: Get a $50 credit on the cost of a fan to more efficiently move air through your furnace and duct system.

• Air source heat pumps: A popular option in moderate climates, this system moves air between the outside and inside of your home to heat it in the winter and cool it in the summer. It’s up to four times more efficient than a regular HVAC system, costs a lot less, and you can get up to a $300 credit on the cost of buying a system for your home.

• Central air conditioning systems: If you’re not in a moderate climate, you can still purchase an energy efficient central air system and get up to a $300 credit on its cost. Your HVAC contractor should be able to provide you with a certification stating that it qualifies for this tax credit.

• Gas, propane, or oil hot water boiler: These systems provide heat through pipes in the baseboards or floorboards of a home that carry hot water. Get toasty toes plus a $150 tax credit off its cost, which also includes installation costs.

• Natural gas, propane, or oil furnace: If you purchase an energy-efficient furnace, you’re eligible to get a credit of up to $150 of the cost of purchasing the system.

• Biomass stoves: Before the green movement, these were more often called “wood stoves.” Of course, now that you can purchase models that burn plant fibers, agricultural waste, and other items that were formerly headed for the dump, they get a fancy new name. You can get a $300 tax credit on the cost of purchasing a new stove, as long as its thermal efficiency rating is at least 75%.

Final Word

Saving the environment can save you money! When you’re upgrading your home and you want to go the energy-efficient route, check with the salesman to make sure you’re buying the correct equipment to qualify for the tax credits. Did you make any home improvements to improve energy efficiency this year? Which credits are you claiming?

Source: Money Crashers