Even though crude oil prices have fallen $10 since last month’s high near $100 a barrel, that hasn’t translated into much savings for consumers’ heating fuel costs.
The average homeowner is expected to spend 9% more to heat their home this winter than last year, according to the Energy Information Administration. The average cost will be about $972.
If you’ve made energy-efficient home improvements this year, you may be able to dull the pain of these rising costs with tax credits or cash rebates.
But you need to act fast!
The federal residential energy tax credits will expire on December 31. Many state and utility companies’ cash rebates for energy-efficient home improvements will go away at the end of the year as well.
If your replaced an old furnace, boiler or water heater with energy-efficient units or installed new storm windows or insulation this year – or last – you can take advantage of a tax credit of up to $500. This is a nice tax break. Remember tax credits, unlike deductions, reduce your tax bill dollar for dollar.
Here’s what’s eligible:
You can get up a $500 credit (equal to up to 10% of materials costs) for insulation materials, exterior doors and metal roofs that are the right color to reduce heat.
You can get a $300 credit for the right kind of central air conditioner, water heater or thermal heat pump.
Get up to $200 (again, equal to up to 1% of materials costs) for storm windows and skylights. And you’re eligible for $150 for a qualifying furnace or boiler and $50 for the right type of fan that’s used in a furnace.
Be careful. Just because a product is labeled “energy-efficient” doesn’t mean that it’s eligible for the tax savings. All ENERGYSTAR labeled windows and skylights qualify, but not all ENERGY STAR heat pumps, so check the ENERGY STAR website at www.energystar.gov to be sure.
What do you need to do to take advantage of these credits?
1) Make sure you get on to you contractor’s schedule by the end of the year. Home improvements installed from January 1, 2006 to December 31, 2007 should qualify.
2) Improvements must be on your primary residence. If you and your spouse owned and lived apart in separate homes, you can each take $500.
3) There is a total lifetime limit of $500 per tax return.
4) Attach Form 5965 to the 1040 tax return to claim the resident energy tax credit.
Unfortunately, if you have to pay the pay the alternative minimum tax, you cannot claim the $500 home improvement credit. An AMT “patch” currently working its way through Congress would keep 20 million more families from being thrown into the AMT and would allow the residential energy credit to count. But for right now, it does not.
What if you didn’t make those big home improvements? You may not be able to hire a contractor by the end of the year, but you can still see some energy savings before December 31.
A number of state and electric utility efficiency programs in various states are offering cash rebates if buy more energy-efficient appliances and products this year, but many of these “use it or lose it” programs also will end on December 31.
Check out the Edison Electric Institute’s new website, www.getenergyactive.org, to find out what rebates your local utility may be offering. Here’s a sampling of some of the products that could qualify:
ENERGY STAR Clothes Washers: An ENERGY STAR qualified clothes washer can save you $550 in operating costs over its lifetime compared to a regular clothes washer, according to Edison Electric Institute.
In New Jersey, customers of Atlantic City Electric, Jersey Central Power and Light, PSE&G Electric, and Rockland Electric Company can earn a $50 and $75 cash rebate select ENERGY STAR® qualified clothes washers.
In Vermont, every electric utility customer is eligible for a $50 cash rebate on select ENERGY STAR qualified clothes washers.
In northern and central California, customers of Pacific Gas & Electric are eligible for a $35 or $75 rebate when they buy qualifying high efficiency ENERGY STAR clothes washers.
ENERGY STAR Refrigerators/Freezers: ENERGY STAR qualified refrigerators require about half as much energy as models manufactured before 1993.
Electric utility customers in Delaware are eligible for a $100 rebate on select ENERGY STAR qualified refrigerators and freezers.
In southern California, customers of Southern California Edison can get a $50 rebate on ENERGY STAR qualified refrigerators and freezers.
ENERGY STAR Programmable Thermostats: Programmable thermostats automatically adjust your home's temperature settings—higher when your home, lower when you’re away—to easily save you money.
Kansas City Power & Light customers can qualify for a free Honeywell programmable thermostat—a $300 value.
·New Hampshire customers of KeySpan Energy can qualify for a $25 rebate for each ENERGY STAR® Clock Thermostat installed—up to 2.
ENERGY STAR Lighting: ENERGY STAR qualified compact fluorescent lighting provides bright, warm light but uses about two-thirds less energy than standard lighting and lasts up to 10 times longer.
In Connecticut, United Illuminating is offering its customers coupons toward the purchase of ENERGY STAR light bulbs: $2 off ENERGY STAR Qualified light bulb packs priced at $3 or more; $10 off ENERGY STAR Qualified interior light fixtures including Torchieres, lamps, ventilation fans with light kits, or ceiling fans with light kits.
In Kentucky, customers of Duke Energy can earn a $2 instant rebate on each CFL bulb they buy—up to 12 bulbs.
Again, if you’re thinking of purchasing a new refrigerator or need a bunch of light bulbs, better hurry. Some of these offers will also end of December 31st.
CNBC Correspondent Sharon Epperson is the author of “The Big Payoff: 8 Steps Couples Can Take To Make The Most Of Their Money – And Live Richly Ever After”