CNN Money is offering seven suggestions for reducing your tax, all possible before filing your 2007 taxes. The first suggestion is to “re-energize” your home.
You can reduce your tax bill by up to $500 if you install insulation, windows, doors or central air conditioning that meet certain energy conservation standards. You also can take a credit up to $2,000 if you install a solar-powered hot water system or solar photovoltaic panels, which convert sunlight into electricity.
While this tax credit sounds interesting, I don’t see it as an immediate financial advantage for the taxpayer. Yes, making these changes may increase the “value” of the house, but only if a buyer recognizes that down the road. You won’t get as much tax back as you would spend to make these changes. So you’ll owe the government less, but more money will leave your pocket. Here are the credits you can expect to receive:
* $50 for each advanced main air circulating fan
* $150 for each qualified natural gas, propane, or oil furnace or hot water boiler
* $300 for each item of qualified energy efficient property.
Even if you go on a spending spree, the maximum credit you’ll receive on your tax form is $500. From a financial standpoint, this is likely not worthwhile, but green energy will eventually be less harmful to the environment. I’d like to see better incentives.
7 Year-End Tax-Saving Moves [CNN Money]
Treasury and IRS Provide Guidance for energy Credits for Homeowners [IRS]
Updated June 20, 2014 and originally published November 19, 2007. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.