Did you know that you can spend up to $5,000 on caulk for your house and deduct 30% of that from the taxes you owe? OR you could spend $10,000* having a wind turbine installed and deduct 30% of THAT from your taxes?
True story. There’s lots of fine print to consider. For some items, installation is also counted, for some things it’s just the caulk item itself. For some improvements, you can take the 30% credit no matter how much it costs, for others, you’re limited to a maximum credit of $1,500 (30% of that $5,000 worth of caulk is $1,500). In a few cases, you can take the credit for improvements made to your principal residence or second home, for others it’s limited to primary homes only.
Energystar.gov has the details. And, for a .gov site, it’s actually pretty clear. For every qualifying type of purchase, it tells you exactly what credit you can take, whether installation is included, whether it has to be your main home or even if new construction homes qualify (the answer is mostly no on that one).
Remember, this is a tax CREDIT, not a tax DEDUCTION. Credits are generally much more valuable because they reduce your taxes dollar for dollar, a deduction will reduce your tax bill but the amount depends on your tax bracket. If you decide to do something with a $1,500 limit, keep in mind that limit is the total for ALL improvements made and claimed for 2009 & 2010, not $1,500 per item. Check with your CPA if you’re not totally clear (or even if you think you are!)
By the way, anyone who has ever worked on a historic home knows that it is possible to spend $5,000 on caulk.
*Don’t blame me if your neighbors hate you. And I have no idea if $10,000 will actually buy a wind turbine, although I might just have to check into it now.
