by Kimberly Lankford, Contributing Editor from Kiplinger
Can you still get a tax break for making energy-efficient home improvements in 2011?
If you didn’t get around to making energy-efficient home improvements last year, don’t worry — it’s not too late to get a tax break. But the tax credit in effect for 2011 projects is a lot less attractive than the one that applied to 2009 and 2010.
In 2009 and 2010, you could claim a tax credit worth 30% of the cost of qualifying energy-efficient home improvements, up to a maximum credit of $1,500 for those two years combined. In 2011, the credit is much smaller — $500 — and it is off-limits if you already claimed the credit for energy-efficient home improvements in the past. (A tax credit, which reduces your tax bill — or increases your tax refund — dollar for dollar, is more valuable than a tax deduction, which merely reduces that amount of income that is taxed).
The 2011 home energy tax credit is now limited to 10% of the purchase price of energy-efficient windows, doors and skylights, up to a maximum credit of $500, and only $200 of that amount can be allocated to the cost of replacement windows. Certain home improvements have specific dollar limits for the credit such as $300 for eligible central air conditioning, $300 for an air source heat pump, $300 for an electric heat pump water heater, and $150 for eligible natural gas, propane or oil furnaces. Even if you install several improvements, the maximum credit you can claim is $500. And you won’t be able to claim it on your 2011 federal tax return if you already received $500 or more in credits for energy-efficient home improvements from 2006 through 2010.