Q: In 2007, I had to replace my solar water heater with a new one. Can I write off the $875 cost of the new solar water heater?
— Dave, Davie
A: You can't write off the entire cost, but you may be entitled to a residential alternative energy tax credit for 30 percent of the total, says Mitchell J. Margolies, a partner at Rachlin, a South Florida accounting and financial advisory firm. But he says you have to meet a few specifications. To be qualified for the credit, the water heater has to be certified by the Solar Rating Certification Corp. or a comparable group. It also had to be placed in service in 2006, 2007 or 2008, so you're fine on timing. And, people who live in condos can claim the credit by splitting the cost of the equipment and installation with other unit owners. The credit is good for up to $2,000. You take the credit on IRS form 5695. |
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Q. Can you please tell me if the installation of hurricane shutters qualifies for a tax deduction?
— Al, Boynton Beach
A. Mitchell L. Margolies, partner at Rachlin LLP, a South Florida accounting and financial advisory firm, says the answer is no. You can't take a tax deduction, but there is one way this cost can help you to save on taxes. When you sell your home, you should add the cost of the shutters and installation to your "basis," which is the cost of your house plus any major improvements. You subtract your basis from the gain to figure out if you owe tax on the gain. So the bigger your basis, the smaller the potentially taxable gain.
If the shutters are on a rental or investment property, you can depreciate them along with other costs of ownership.
Margolies reminds you that there's one other way you might benefit: Tell your insurance company that you've installed shutters. That might lower your future premiums.
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