If you are a homeowner who neglected to take advantage of the energy tax credits in 2010, you will get another chance in 2011. This is a great relief to many who thought they missed the cut-off. We owe our thanks to the extension of the energy-efficiency improvement tax credits.

Supported by the Obama Administration, and passed by both houses of Congress, the extension as part of the legislation that renewed the Bush-era tax cuts.  It allows individuals to receive tax credits for installing qualifying energy-efficient items, such as windows, doors, water heaters, roofs, insulation, heating and air-conditioning units, and biomass stoves. In order to claim the credit, these items must be installed at your principal residence.

Unfortunately, the extension has a significant reduction in the tax-credit amounts from 2010.  In 2011, the credit cap will be reduced from $1500 to $500, and the credit percentage will vary depending on what improvements are made.  The tax credit is also retroactive to December 31, 2005, meaning a homeowner who has claimed at least $500 in energy-efficiency tax credits between 2006 and 2010 will not be able to do so in 2011.