If you live in Iowa and undertake a solar-energy project on your house, you might qualify for a tax credit on both your federal and state tax returns.

The federal government is offering a tax credit of 30% of the cost of a qualifying solar project. And Governor Branstad recently signed into law a new Iowa tax credit for solar projects that amounts to 50% of the federal credit, up to $3,000.

The catch on the Iowa credit is that the state has a limited amount of funds available for the credit and you have to apply in advance with the state for approval to “reserve” a credit on your 2012 tax return.

Qualifying projects include things such as solar electric projects and solar water heaters added to your main home or a second home. Projects at rental properties DO NOT qualify.

If you think you qualify for the credit, you should contact a tax professional such as me to get the application in to the state for approval.

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