While it may not be the end of the world, it will soon be too late to take advantage of the window tax credit.
Intertwined with the American Recovery and Reinvestment Act of 2009, this federal tax credit – due to expire on December 31, 2010 – enables homeowners to receive a $1,500 window tax credit for all upgrades and replacements. There’s a few important things to note before diving in so let’s explore them here.
Your first consideration when thinking about the window tax credit should be whether or not the windows you’re looking to install actually qualify for the credit. It’s always recommended that you check with a window consultant for assistance when making that determination. Most reputable window manufacturers carry product lines that will meet the requirements to qualify for the rebate. It’s a good idea to keep in mind that many local and national advertisements show low-cost windows at a promotional rate. Unfortunately, many customers discover that windows featured in the promotion don’t qualify for the window tax credit and an upgrade would be necessary. These advertisements are really only designed to get a windows sales person into your home rather than trying to educate you.
Next, let’s understand the differences between a credit versus a deduction. Deductions reduce how much you owe in taxes by decreasing your income. This can place you into a lower tax bracket and that means you’ll owe less. Conversely, credits are figured after you determine your tax bracket and how much you should owe. A credit is a dollar-for-dollar reduction in the amount of tax you owe. A credit is generally much more valuable than a deduction since the credit reduces the amount of tax that must be paid.
The last consideration when thinking about the window tax credit may be the most important. As we mentioned at the beginning of our post, the current window tax credit is set to expire at the end of 2010. Many homeowners will wait until the last minute to take advantage of this credit, and many of those individuals will end up missing their chance. You’ll want to kickoff the process of researching windows and meeting with home improvement consultants before it’s too late.