Homeowners who install qualifying energy-efficient property in their main home may be eligible for one of two new tax credits.

The Nonbusiness Energy Property Credit provides a non-refundable tax credit of up to $500 for installing energy-efficient property on your main home. Qualifying energy-efficient property includes exterior doors, skylights, insulation, and central air conditioning. The Residential Energy Efficient Property Credit provides a non-refundable tax credit of up to $2,000 for installing solar panels or fuel cell power plants in your home.

V. Short in Virginia asked about these new residential energy tax credits. "We installed new windows in our house last year. I heard if you do something to your home to conserve energy you could take a tax deduction."

New windows do qualify for the Nonbusiness Energy Property Credit portion of the energy tax tax credit. Exterior doors, metal roofs, insulation, and central air conditioning also qualify. You receive a tax credit worth 10% of the price of the energy-efficient products you buy, with a maximum tax credit of $500 for the years 2006 and 2007.

If you install solar panels or fuel cells in your home, you'll qualify for the "residential energy efficient property credit." This credit is worth up to $2,000.

Both credits are available only to homeowners who install qualifying property in their main home. You claim this tax credit using IRS Form 5695, Residential Energy Credits (includes instructions).