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Need home improvement motivation? Tax break might help

Published On: Feb 20 2013 12:41:11 PM CST
Updated On: Mar 07 2013 10:21:31 AM CST
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iStock / OlgaMiltsova

(NewsUSA) - The "fiscal cliff" was averted, but what does this mean to homeowners? The answer: a lot. The bill, signed into affect on Jan. 2, restricts tax rates from increasing and, among other things, reinstates and extends tax credits for qualifying energy-efficient home upgrades between Jan. 1, 2012 through Dec. 31, 2013. Homeowners can earn up to $500 in tax credits with the purchase and installation of qualifying products.

"Now is an ideal time to check off some of those home improvement 'to do' items," said Trey Hoffman, global product manager at Rinnai. "In addition to the tax break, homeowners reap the benefits of these energy-efficient upgrades for years, as these products can help reduce monthly utility bills."

What qualifies as an energy-efficient upgrade? All products must meet certain efficiency criteria to qualify. A licensed contractor, builder or remodeler can help homeowners select eligible products, such as:

* Insulation materials, which help keep a house warm in the winter and cool in the summer, qualify if they meet 2009 International Energy Conservation Code requirements. The credit value is 10 percent of insulation material cost.

* Exterior windows and skylights, if Energy Star-rated, can reduce homeowner energy bills seven to 15 percent. A 10 percent credit can be earned when homeowners select Energy Star-qualified windows.

* A Tankless Water Heater can save homeowners up to 40 percent on their monthly energy bills. Qualifying tankless water heaters have an Energy Factor (EF) of at least .82. A $300 credit is available to homeowners opting for a more efficient way to heat water.

"Homeowners don't always have to sacrifice luxury, aesthetics and comfort when upgrading to energy-efficient products. This is especially the case with tankless water heaters," added Hoffman. "Tankless technology affords homeowners the ability to enjoy endless hot water, while saving energy. The product's long lifespan -- nearly two decades -- gives homeowners peace of mind knowing they've selected an energy-efficient product that will pay them back month after month for years to come."

What documentation is needed to earn the tax credit? Homeowners need to file IRS Form 5695 with their taxes. They also need to keep receipts proving when the equipment was purchased and a copy of the manufacturer's certification. Accountants and tax advisors can provide additional guidance.