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Federal Tax Savings and Replacement Windows for Your Home
by Gabby Hyman
Did you know that when you choose energy efficient windows as replacement windows in your home you may be able to earn tax credits? The Energy Policy Act of 2005 establishes tax credits--a reduction of tax liability--for replacement windows that carry high energy-efficient ratings. When you add the tax credit to the amount of money you'll save in energy costs by replacing your current windows, it can make for financial good sense in rocky times.
According to the Internal Revenue Service, the Energy Policy Act allows homeowners to apply a ten percent tax credit (with a $500 ceiling) for improving insulation systems, doors, and windows. The credit for a window replacement project is ten percent with a $200 ceiling. The credit can only be applied to your principal residence.
Installation costs are not included in the tax credit, just the cost of materials. You simply save your receipt for the windows and the Manufacturer's Certification Statement (accompanying the purchase) to prove that you chose energy-efficient windows, and you include these with your tax return.
The windows must be put into service before December 31, 2009
Choosing Energy Efficient Windows
Not all models of energy efficient exterior windows and skylights qualify for the tax credit. You'll need to choose windows with a "Low-E" designation approved by the federal Energy Star program.
The good news is that Energy Star qualified windows can reduce your heating and cooling costs by upwards of 15 percent, depending on your region of the country. Energy Star qualified windows are also known to fight condensation and protect your valuables from sunlight damage.
Energy efficient replacement windows come with coatings that reflect heat in summer while still allowing visible light. The government reports that non-treated, double-paned conventional glass windows allow up to 75 percent of outdoor heat into your home.
In the winter, energy efficient windows retain indoor heat, resist fogging and, unlike conventional glass, remain warm to the touch. When you combine comfort, energy savings, and a tax credit, it's easy to see advantages in replacing your windows while the legislation remains in effect.
Sources:
Energy Star (tax info)
Energy Star (energy savings)
Internal Revenue Service
About the Author
Gabby Hyman has created online strategies and written content for Fortune 500 companies including eToys, GoTo.com, Siebel Systems, Microsoft Encarta, Avaya, and Nissan UK.
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