Make home improvements & lower your tax bill

You can receive a tax credit up to $1,500 this year for making energy efficient improvements to their homes. Under the American Recovery and Reinvestment Act (ARRA), the Residential Energy Credit has been increased to the smaller of 30% of the cost of qualifying improvements or $1,500 for improvements placed in service during 2009. The total credit is limited to $1,500 for both the 2009 and 2010 tax years combined.

Qualifying home improvements include:

• Energy-efficient exterior windows, doors and skylights
• Energy-efficient heating and air conditioning systems
• Insulation
• Water heaters (natural gas, propane or oil)
• Roofs (metal and asphalt)
• Biomass stoves

The credit only applies to a principal residence in the United States. To take advantage of this credit, complete Form 5695 and report the total on Form 1040, line 52. Please note, a similar law was in effect in 2007 where the maximum credit was $500.