Tax credits still available for energy-saving improvements

Tax credits for new homebuyers have disappeared, but they're still available for owners who take steps to trim their cooling and heating bills.

Q. You recently wrote that the tax credit for first-time buyers has expired. Did the credit for purchasing an energy-efficient air conditioner expire, too?A. No. If you install an eligible air-conditioning system by the end of this year, you can claim a tax credit to cover 30 percent of the cost. The credit is capped, though, at $1,500.Energy-saving heating, ventilating and air-conditioning systems aren't the only items that are eligible for the credit. Others include certain metal and asphalt roofs, water heaters, heavy-duty insulation and some windows and doors. The credit, of course, comes with some strings attached by the Internal Revenue Service. For starters, you must have a "manufacturer's certification statement" from the maker or installer confirming the air-conditioning system meets the energy-saving standards set by the government. The credit can be claimed only if the unit is installed in your primary residence.Importantly, the credit is not available to homeowners who simply install an energy-saving air-conditioning unit in a window. That means that you may have to install an entirely new HVAC system to be eligible.For more information, get a copy of IRS Form 5695, Residential Energy Credits, by visiting the www.irs.gov website or by calling the agency at (800) 829-3676. The federally run www.energystar.gov website also has lots of useful information, including a list of answers to frequently asked questions.Are fallen trees covered by a typical insurance policy?A. Generally, yes. If a tree falls on an insured structure, such as a home or garage, a typical policy will pay to repair any damage the tree caused and also pay up to $500 or $1,000 to have it removed. But if the fallen tree didn't do any damage, the insurer usually doesn't have to pay for removal.If a neighbor's tree falls on your property, you should file a claim with your own insurer anyway, a spokeswoman for the nonprofit Insurance Information Institute (www.iii.org) said. Your insurer might then try to collect on the neighbor's policy, in which case any deductible you would have to pay would be reimbursed.The cost of replacing the fallen tree with a new one might be covered, too. Standard policies typically provide up to $500 for a tree or shrub that is damaged or destroyed by fire, lightning, explosion, theft, aircraft, vandalism, malicious mischief or someone else's car.What does it mean when experts say that there is a "shadow inventory" of foreclosures?A. The "shadow inventory" reflects the number of homes that aren't in foreclosure yet, but whose owners are so far behind on their payments that the start of foreclosure proceedings is likely imminent.For example, real estate data-provider RealtyTrac recently reported that there were about 1.65 million foreclosure filings in the first six months of this year. That's a 5 percent drop from the last six months of 2009.However, there are so many homes that are teetering on foreclosure - the shadow inventory - that total foreclosures likely will top a record 3 million this year. That high level of inventory could keep home prices from rebounding anytime soon.If my wife and I form the type of living trust that you recently wrote about and transferred our home and rental property into it, would we also have to get a special checking account for the trust and file a separate tax return for it?A. No. The Internal Revenue Service does require most homeowners and small rental properties to file a separate tax return for their trusts. No special checking account is needed, either.Most owners form an inexpensive living trust and put their home and other assets into it so the property can pass quickly to their heirs instead of going through the long and costly probate process. The fact that no additional record-keeping is needed is an added bonus.bull; For the booklet "Straight Talk About Living Trusts," send $4 and a self-addressed, stamped envelope to David Myers/Trust, P.O. Box 2960, Culver City, CA 90231-2960.#169; 2010, Cowles Syndicate Inc.