5 green home upgrades that also buy you a tax break

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    By Karla Bowsher/MoneyTalksNews

    Energy-efficient products might cost more than other models, but they essentially pay for themselves in reduced home energy costs, according to the U.S. Environmental Protection Agency.

    Federal income tax credits can add to homeowners' savings. Credits for five types of alternative-energy systems, like solar water heaters, are available through the new year.

    That means taxpayers who purchase one of these systems this year or next year can apply the credit to their 2015 or 2016 personal income tax bill from the Internal Revenue Service. This Residential Renewable Energy Tax Credit, as it's technically known, expires Dec. 31, 2016.

    As Money Talks News founder Stacy Johnson explains, a tax credit is even better than a tax deduction. "A deduction just lowers your taxable income, but a credit? That lowers your tax bill. It's like money in the bank."

    The Residential Renewable Energy Tax Credit is worth up to 30 percent of expenses for an alternative-energy system, including installation and labor costs.

    To be eligible for the credit, taxpayers must purchase the system for their home, which must be located in the U.S. and owned by the taxpayer. (So rental properties do not qualify for this tax credit.) They must also file a Form 5695 with their tax return.

    Click ahead for a look at 5 home upgrades that are good for the environment and your wallet.