Learn about recent tax credits and tax deductions for homeowners.
New laws in the past few years have brought several new tax breaks for homeowners, and taken one away. These include:
- tax credits for homes that generate electricity
- a tax break for some defaulting homeowners
- tax credits for first time homebuyers
- a continuation of the mortgage insurance deduction, and
- elimination of a tax loophole for owners of vacation or rental homes.
Tax Credits Generating Electricity or Using Solar Water Heating
The Energy Policy Act of 2005 provided a permanent tax credit (beginning in 2006) for homeowners who install photovoltaic systems to generate electricity. The tax credit is worth 30% of the cost of the system, up to $2,000. The same permanent tax credit is available for a solar water heater, provided the heater is not used to heat a pool or hot tub. Those who install a fuel cell system to generate electricity get a tax credit that amounts to 30% of the cost, up to $1,000 per kilowatt of power generated. Taxpayers can claim the credits on IRSForm 5695 Residential Energy Credits, available from the IRS website at www.irs.gov.
Unfortunately, tax credits for qualifying energy efficient home improvements, HVAC (heating ventilation air conditioning) equipment, roofing, doors, windows, and major appliances, expired in 2007 after a two-year run.
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