Woburn, MA November 12, 2005 -- The Energy Tax Incentives Act of 2005
was created to offer Americans tax breaks in 2006 for being energy efficient.
So, if you're environmentally friendly, some of the provisions of this
new law will save you some taxes, said Andrew Schwartz, founder of RealEstateProTaxes.com,
an affiliation of CPA's throughout the country that specializes in tax
planning and preparation for real estate professionals.
2006 Energy Tax CutsEnergy Efficient New Home:
Contractors are eligible for a tax credit of up to $2,000 for each new
(or significantly rehabilitated) home "substantially completed"
and sold during 2006 and 2007, provided the home meets certain energy
savings criteria. If you're in the market for a brand new home, make sure
the builder passes this lucrative tax break on to you.
Energy Efficient Commercial Improvements:
If you own a commercial building or condo, you're eligible to claim an
immediate deduction of up to $1.80 per square foot (versus depreciating
the costs incurred over 39 years) by making major energy saving improvements
to your building's lighting, hot water, and HVAC systems during 2006 and
2007. Upgrading insulation, metal roofs, and exterior doors and windows
also counts towards this deduction.
Energy Efficient Home Improvements:
You can now qualify for a tax credit equal to 10% of the money spent on
the installation of certain energy efficient improvements to your principal
residence, including insulation and exterior windows, doors, and skylights.
You can also take a tax credit for "qualified energy property"
including up to $50 spent on circulating fans, $150 on furnaces or hot
water boilers, and $300 on heat pumps, water heaters, and central air
The credit applies for purchases made during 2006 and 2007, and is limited
to a lifetime max of $500 per dwelling, with no more than $200 of the
credit to be taken for replacement windows.
Energy Efficient Appliances:
The law provides manufacturers with a tax credit ranging from $50 to $200
per unit for each energy efficient dishwasher produced in 2006 and 2007,
and for each washing machine and refrigerator produced between 2005 and
2010. If purchasing an energy efficient appliance is in your plans, make
sure the manufacturer passes this tax savings on to you.
The $2,000 "Clean-Fuel" deduction is replaced with a more valuable
tax credit ranging from $650 to $3,400, depending on the vehicle, for
purchases made between 2006 and 2010.
Taxing Tax Breaks:
These rules are very specific, and it's not easy to figure out whether
you're eligible for a tax break, and if so, how much you can claim. But
for the next few years, taking steps to save on energy costs could save
you some taxes, explained Schwartz.
About The Author
Andrew Schwartz, CPA, is the founder of CPA Niche, a national network
of CPAs. He is the editor and a major contributor to
www.RealEstateProTaxes.com, a website
that provides income tax and financial planning information geared towards
real estate professionals. Schwartz has appeared on CNBC's Money Club.
He is available for interviews..