You may be able to get tax credits for energy-efficiency improvements or for installing alternative-energy equipment in your home. The available tax credits cover a percentage of the cost, up to a specified maximum amount.

Home improvements must meet the energy-efficiency standards specified by the Internal Revenue Service (IRS). Qualified energy-efficient home improvements can include:

--          Insulation that reduces heat loss/gain

--          Exterior windows, including skylights

--          Exterior doors

--          Storm doors and windows

--          Natural gas, propane, or oil furnaces or hot water boilers

--          Heat pumps

--          Gas, oil, or propane water heaters

--          Electric heat-pump water heaters

--          Central air conditioning

--          Advanced main air circulating fans

--          Metal and asphalt roofs

--          Biomass stoves

Alternative-energy home improvements that may qualify for tax credits include:

--          Solar water-heating equipment

--          Geothermal heat pumps

--          Residential small wind-energy systems

--          Solar panels or photovoltaic systems

--          Fuel cell power plants

A qualified residential fuel cell and micro turbine system usually means one that converts a fuel into electricity by electrochemical means and has an electricity-only generation efficiency of at least 30% and an electricity-generation capacity of at least 0.5 kilowatts.

To qualify for a tax credit, you must have placed the energy-efficient property in service in your principal residence during a specified period. However, tax credits are also available for the following qualified energy-efficient improvements made to second homes and rental properties:

--          Geothermal heat pumps

--          Solar water heaters

--          Solar panels

--          Small wind energy systems

You can claim these tax credits on Form 5695 (PDF), Residential Energy Efficient Property Credit, which you can file with your Form 1040 or 1040NR. You do not have to itemize deductions to claim these tax credits. The Energy Star Web site offers more information about energy-efficient home improvements that are tax deductible.