February 13, 2009

Possible tax credit of $1,500 towards home energy improvements

The stimulus bill is currently winding its way through congress. It hasn't passed yet but it appears to be making progress. The bill includes a variety of spending proposals and tax cuts all aimed at stimulating the economy in some way or another. One item I saw mention of that interested me was a $1,500 tax credit towards home energy improvements.

This news article 'Billions in tax cuts for families and businesses' from the AP on Yahoo says: "Existing homeowners could get a tax credit of up to $1,500 by making their homes more energy-efficient in 2009 or 2010. Numerous projects would qualify, such as installing energy-efficient windows, doors, furnaces, and air conditioners, or adding insulation. Homeowners can get back 30 percent of their expenses, up to $1,500."

Keep in mind that the bill isn't law yet so this is subject to change or removal.

As written the bill is going to give 30% of your energy efficient improvements up to $1,500 tax credit.

This could be a pretty good deal for the homeowner. Personally I've been thinking of getting a heat pump installed to help cut our home heating costs and also give us air conditioning. Right now we've only got an electric furnace and no AC. I'm not sure what a heatpump would cost us exactly but I'm guessing its in the $4,000 to $7,000 range. Since a heatpump could cut my heating bill 30-40% over my current electric furnace I think this could be a good long term investment. If I could take a $1,500 tax credit it would be even more attractive.

The heat pump is only one option. It might make most sense to get some more insulation installed and do some weatherization of our house first. Those improvements are relatively cheap and can get you the biggest savings per dollar spent.

I'll keep an eye on this credit and if it does go through then I will need to investigate and find out the most cost effective home heating energy savings options.

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