In case you missed it, which is highly likely, the congress once again extended and the president signed into law the tax credit for home energy efficiency improvements. This includes the credit of for adding home insulation.
The good news: homeowners who installed insulation in 2014 can deduct up to $500 on their Federal Income Tax. That is just one of the ways you could have put money directly back into your pocket with many other items included again in this legislation.
The bad news: homeowners in 2015, once again, do not know if they will also have that opportunity.
These home energy efficiency tax credits were originally designed to be an incentive to motivate homeowners and businesses and in turn stimulate the economy while helping to mitigate a known cause of global warming. Unfortunately, retroactively offering this every year creates confusion and fails to provide that intended motivation or stimulation.
It is hard to say whether come this December the government will once again decide to “incentivize” energy efficiency improvements. Keep in mind, the bigger savings is in reduced energy costs every month. But there is something just so alluring about getting an off-the-top deduction at tax filing time…
So, go ahead and take the deduction if you made the improvement last year. And if you are planning one this year, first send an email to your federal legislators and remind them this tax credit should be permanent rather than retroactive if they want to motivate, stimulate and mitigate. Better yet, email the entire U.S. congress and have all your friends and family do so as well.