The wheels of government do, indeed, grind slowly. But never fear, the Internal Revenue Service finally came through in late February with guidance on how taxpayers can comply with the Energy Policy Act of 2005, which was signed into law last August and took effect Jan. 1.

Under the law, owners who make certain energy-conscious improvements during the 2006 and 2007 tax years can claim a credit on their tax returns. To qualify, the law states, the component must meet or exceed the criteria established by the 2000 International Energy Conservation Code, including supplements, and must be installed in the taxpayer's principal residence.

Now, the IRS says taxpayers can rely on manufacturers claim's that their products will qualify for the credit as proof the items meet the law's requirements.

Here's a detailed rundown of how the credit works:

There are different levels of credit, depending on the type of improvement made. But the maximum amount of credit for all energy-related improvements combined and undertaken by an individual home owner cannot exceed $500 during the two-year period of the tax credit.

The credit applies to improvements "placed in service" between Jan. 1, 2006 and Dec. 31, 2007. That means projects started before the new year but not completed until afterwards qualify.

Improvements eligible for the credit include the following:

• Added insulation to walls, ceilings or other parts of the building envelope.

• Replacement windows.

• High-efficiency gas, oil and propane furnaces and boilers.

• High-efficiency central air conditioning units, including air-source and ground-source heat pumps.

• High-efficiency fans for heating and cooling systems.

• High-efficiency water heaters, including heat pump water heaters.

The tax credit "incentives" for each of the above improvements run like this: 10 percent of the cost for added insulation, up to $500, and replacement windows, up to $200; $150 for qualifying furnaces and boilers; $300 for qualifying a/c units; $50 for qualifying fans, and $300 for qualifying water heaters.

Besides these tax benefits, a separate credit is available for solar hot water systems installed during a three-year period beginning Jan. 1. Better yet, the limit on the credit is four times that allowed on the improvement listed above.

Home owners can write off up to 30 percent of the cost, up to a $2,000 lifetime maximum, for installing photovoltaic or solar hot-water systems used exclusively for purposes other than heating swimming pools and hot tubs. The system must use solar power to provide at least half of a home's hot water. In addition, the water must be used in the dwelling and the system must be certified by the Solar Rating and Certification Corp.

Finally, a credit also is available for the 2006-2008 period for installing a "qualified" fuel cell unit. This credit is limited to 30 percent of the cost, up to a maximum of $500 per 0.5 kW of capacity.

A good website for information concerning federal tax credits for energy-related home improvements is energystar.gov.

Published: March 1, 2006

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When Lew Sichelman first started writing about housing in 1969, he was the youngest real estate writer in the country. Now, 37 years later, he's one of the oldest -- and most decorated. He has been rated the top housing columnist in the country by the National Association of Realtors as well as by his peers in the National Association of Real Estate Editors. Indeed, NAREE has recognized his work on numerous occasions. One year - due to his advancing age, he can't recall which one - he earned top honors in the annual NAREE Journalism Contest in three out of the four major writing categories. It was the first time one writer has won so many NAREE awards in a single year. Known for his ability to make even the most difficult topics understandable, Sichelman also has been honored by the National Association of Home Builders and the Mortgage Bankers Association. He began providing in-depth coverage of and consumer-oriented information about housing and housing finance at the Washington Daily News, where he was real estate editor. He held that same position for nine more years at the Washington Star, which purchased the News in 1972. The Star, a so-called "writer's newspaper" which also had the misfortune of being an evening paper, was put out of its misery in 1981, and Sichelman, who had begun self-syndicating his column in 1978, decided to become a full-time columnist. Today, his column, "The Housing Scene," is distributed by United Media to newspapers throughout the country. He also is on the staff of National Mortgage News, an independent newspaper which is considered the bible of the mortgage business. And he writes for numerous other publications, including MarketWatch.com, where he answers readers questions once a week, Sports Illustrated (don't ask), RealtyTimes.com, BigBuilder and others. Sichelman is married, the father of five and grandfather of eleven.