Home Energy Credits Expire At the End of 2008

Unless Congress extends the tax provision, 2008 may be your last opportunity to take advantage of the tax credit for residential solar and fuel cell credits.  Since they are scheduled to expire at the end of 2008, you will need to act soon if you are going green.  

• Residential solar equipment - For property placed in service before the end of 2008, a credit is allowed for 30% of the cost of qualifying solar water heaters, up to $2,000 per year, and a credit subject to the same 30%/$2,000 limit also applies for photovoltaic (electricity-generating) solar panels.  The foregoing applies to the taxpayer’s first or second homes.

• Fuel cell equipment - In addition, a 30% credit is allowed for fuel cell property, up to $500 for each half-kilowatt of capacity installed per year on the taxpayer’s principal residence.

Labor costs for onsite installation and for piping and wiring connections are qualifying costs for these credits.  However, the credits do not apply to equipment used to heat swimming pools or hot tubs.

None of the credits can be taken until the energy credit item’s installation is complete.  Under this rule, if the installation is not completed by December 31, 2007, it will not qualify for the credits.

One cautionary note: the credits do not apply against the Alternative Minimum Tax (AMT), which means a taxpayer could lose all or a portion of the tax benefit from the credits.  

Check with our office first to verify the tax benefits before signing on with a contractor or salesperson.  Be sure to contact us so we can determine the benefits based on your particular tax situation.  And remember, these credits expire at the end of 2008, and the installation must be completed by the end of 2008.  Don’t wait too long!