By Jonathan Boral on August 3, 2010
.jpg.aspx?width=75&height=75) In this current political, cultural, and economic environment of energy conservation, the IRS passed the Residential Energy Tax Credit to help those households which purchase items that are more energy efficient. The push to these more energy conscious products is two-fold; for one, they help decrease utility bills for the household over the long-run, and also decrease the amount of energy used, allowing a greater amount of energy to be conserved.
There are a few basic requirements to be eligible for the tax credit, and the first starts with home construction. The tax credit is only eligible to those individuals who install the products as a replacement; new homes are not eligible for these tax credits. Also, they must have been purchased and installed between 2006-2008. Some of the most common products that are often installed include: exterior doors and windows, stoves, central air conditioning, and circulating fans.
Another item that is available for tax credit is an item that is very on trend among many American households currently, solar panels. These items, which can be installed on the roofs of homes, conserve a massive amount of energy by absorbing the heat from the sun and transforming it into usable energy throughout the house. These items, while very expensive, are also huge energy savers.
Often times, the items eligible for tax credit receive 30% back from the purchase price, up to $1,500. Not only that, but the credit can only be received every two years. Therefore, if a household spent $5,000 or more two years in a row on different appliances, they would only be eligible to receive a $1,500 credit over the entire two years, even though they spent a total of $10,000.
In order to apply for the tax credit, a specific IRS form must be filled out, that includes the amount that the product was purchased for with proof, along with personal and household information as well.
Overall, the tax credit is a great incentive for those customers who are looking to invest in energy efficient products. While it may not be apparent in the short term in terms of bills and cost, the investment will prove beneficial for both the household and the greater public in the long haul.
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