Energy Credit Applies to Farmers Too
In preparing income tax returns this tax season, I am seeing a lot more of the non-business energy property credit being taken on taxpayers returns. This credit is for the installation of exterior doors and windows, insulation and related materials to make a home more energy efficient. The credit is allowed for 30% of the costs of the products including installation costs. This is a direct credit against your income taxes so it is much better than a deduction. There is a limit of $1,500 and the credit is currently schedule to expire at the end of 2010.
Another related credit is for installing residential energy efficient property. Projects that qualify are the installation of:
- Solar electric property;
- Solar water heating;
- Small wind energy;
- Geothermal heat pumps; and
- Fuel cell.
The nice thing about this credit is that there is no limitation on the amount that you can spend that will qualify for the credit. This means that if you spend $100,000 on putting in a solar electric project, then you could deduct up to 30% of the cost against your income taxes.
Check both of these credits out and you should review this with your tax advisor to verify if the project applies to you.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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