Ecologue.com

By Theresa Coleman

You've seen the celebrities — think Leonardo DiCaprio and Al Gore — touting the environmental benefits of energy-efficient products. We have an opportunity to leave the planet in better shape than we found it, they say. Sounds good to me, and from the $500 tax credit available, it seems like it sounds good to the government, too.

But, if you are like me, the higher price tag for some environmentally conscious products causes some pause at the register. I was raised to save money. We didn't buy new clothes, and my mother is still waiting to replace that "temporary" dining room set purchased in 1970. But there's something greater than cash-on-hand when I know I'll save tons in the long run.

According to the Energy Information Administration, the United States uses nearly $1 million worth of energy each minute of the day. But we saved $12 billion on utility bills during 2005 by making green choices for our houses, according to the federal government's Energy Star program.

When we talk billions and millions, it's hard to comprehend what it really means for homeowners and their wallets. What do those numbers mean on a more personal scale? Energy-efficient products can save a household as much as one-third on energy bills. It's an investment in the planet — and money in the bank.

To help homeowners over the initial buyer's stumbling block of potentially higher upfront costs of green goods, the government has added an incentive: a tax credit for 2006, 2007 and 2008. Tax credits directly reduce the actual taxes dollar for dollar. That translates to more direct savings than deductions, which only reduce the amount of income subject to tax. However, each type of improvement must meet specific criteria in order to qualify:

• The improvements must have been installed between January 2006 and December 2007.
  
• The improvements must be installed in your main residence.
  
• There must be a reasonable expectation that you will be using the improvement for at least the next five years.
  
• The maximum credit for both taxable years combined is $500.
  
• No more than $200 of the credit can be for windows.
  
• Installation costs are covered only for HVAC systems and water heaters, but not for windows, skylights, doors, insulation or roofs.
  
• Not all Energy Star products will qualify you for the tax credit.
  
• The improvements must meet the certification requirements prescribed by the Secretary of the Treasury.

Always check with your accountant or tax preparer to see if a home-improvement project qualifies. Meanwhile, here's the lowdown on some major types of improvements and the potential for a tax credit:

• Exterior windows and skylights storm doors: 10 percent of the cost, up to $200
  
• Exterior doors: 10 percent of the cost, up to $500
  
• Metal roof: 10 percent of the cost, up to $500
  
• Insulation: 10 percent of the cost, up to $500
  
• Central air conditioning: $300
  
• Gas, oil, propane furnace or hot-water boiler: $150

The Energy Star website has more details about the energy credits available, and how to qualify.

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