| Are you considering a new water heater? Maybe you | | | | costs are costs for property to heat water for use in |
| want to replace your existing water heater with a gas | | | | a home located in the United States and used as your |
| or electrical water heater. There are several options | | | | home if at least half of the energy used by the solar |
| you can have; the standard water heaters or a | | | | water heating property for such purpose is derived |
| tankless system. Another option is a solar water | | | | from the sun. This includes costs relating to a solar |
| heating system. Not only is it the most efficient of the | | | | panel or other property installed as a roof or a portion |
| options available to you but solar water heaters are | | | | of a roof. To qualify for the credit, the property must |
| cost-effective and are an environmentally responsible | | | | be certified by the nonprofit Solar Rating Certification |
| alternative to conventional methods of producing | | | | Corporation (SRCC) or a comparable entity endorsed |
| domestic hot water. If you made energy saving | | | | by the government of the state in which the property |
| improvements to your home located in the United | | | | is installed. The home does not have to be your main |
| States in 2007 or are making them in 2008 you may | | | | home. |
| qualify for the residential energy efficient property | | | | To be eligible for the credit, a system must be "placed |
| credit. | | | | in service" or activated on or after January 1, 2006, |
| In 2005, the United States government enacted the | | | | and on or before December 31, 2008. Expenditures |
| Energy Policy Act of 2005 (EPACT) which gave | | | | with respect to the equipment are treated as made |
| homeowners a 30% Federal tax credit on all solar | | | | when the installation is completed. If the installation is on |
| systems installed between January 1, 2006 to | | | | a new home, the "placed in service" date is the date |
| December 31, 2007. Initially scheduled to expire at the | | | | of occupancy by the homeowner. |
| end of 2007, the tax credits have been extended to | | | | The federal tax credit will pay as much as one-third of |
| December, 31 2008. For residential installations, there is | | | | the cost upfront, but in many states such as California |
| a $2,000 cap. | | | | and New Jersey, there are other incentives available |
| A tax credit is generally more valuable than an | | | | that pay as much as 60%. For example, in Southern |
| equivalent tax deduction because a tax credit reduces | | | | California, the maximum incentive is a $1,500 rebate. |
| tax dollar-for-dollar, while a deduction only removes a | | | | Excess credit may be carried forward to succeeding |
| percentage of the tax that is owed. If you purchase a | | | | taxable year and added to the credit allowable for the |
| solar water heater, you can itemize the purchase on | | | | succeeding taxable year. Be aware: any system |
| your federal income tax form, which will lower the total | | | | producing hot water for a pool, spa or hot tub does |
| amount of tax you owe the government. | | | | not qualify for the 2007-2008 federal tax credit. |
| Per the IRS, qualified solar water heating property | | | | |