tax breaks for renovations

[Rob Blaustein]

Does anyone know about a new IRS ruling that says that contractors who do a renovation get a tax refund of $2,000 per renovation? Apparently this goes into effect this year. My question is--is this for the contractor or for the homeowner doing the renovation (or both). I imagine there are many contractors among you, as well as homeowners who might have, or are planning to renovate this year.

[Frank Hagan]

This is from the Department of Energy's site about the Energy Policy Act of 2005. It allows certain tax credits for some energy saving appliances, renovations and additions of things like solar energy. See the DOE's explanation of it at http://www.doe.gov/taxbreaks.htm



Home Energy Efficiency Improvement Tax Credits
Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in the home can receive a tax credit of up to $500 beginning in January 2006.

The EPACT also provides a credit equal to 30% of qualifying expenditures for purchase for qualified photovoltaic property and for solar water heating property used exclusively for purposes other than heating swimming pools and hot tubs. The credit shall not exceed $2000.

Improvements must be installed in or on the taxpayer’s principal residence in the United States. Home improvement tax credits apply for improvements made between January 1, 2006 and December 31, 2007.


There's a table of the available tax credits, etc. I delayed the purchase of my Prius until after the start of the year to take advantage of the $3,150 tax credit it is eligible for (assuming AMT doesn't kick in!)