Energy Tax Credit Facts
Buyers and contractors alike are looking for new ways to incorporate green technology into homes. Not only do these upgrades save money in the long run, but they also go a long ways in preserving Mother Earth.
Have you heard about the government’s “green” homeowners’ incentives? Take a moment to see how you can upgrade your home and get money back!
There are two basic tax credits available for those interested in making energy efficient improvements to their homes.
First, the Wind, Solar, Geothermal and Fuel Cell Tax Credit. It’s good for both existing homes and new construction, when used for a homeowner’s principal residence.
Homeowners will received a credit totaling 30 percent of their cost for improvements put into service between January 1, 2011 and December 31, 2011.
Here’s a list of what can qualify:
* Geothermal Heat Pumps
* Solar Panels
* Solar Water Heaters
* Small Wind Energy Systems
* Fuel Cells (on this item the credit may not exceed $500 for each 0.5 kilowatt capacity; other limits apply in the case of joint occupancy)
The second notable credit is for Qualified Energy Efficiency Improvements, which gives a 10 percent credit for purchases that were “placed in service” this year.
This particular credit does have a limit, with “the maximum credit for a taxpayer for all taxable years being $500, and no more than $200 of such credit may be attributable to expenditures on windows. This rule means that taxpayers who have claimed $500 or more of this tax credit in prior years, particularly 2009 and 2010, can no longer participate in the program.” (NAHB)
Let’s take a look at what qualifies, according to the National Association of Home Builders an item qualifies if it:
* meets or exceeds the prescriptive criteria for such a component established by the 2009 International Energy Conservation Code as such Code (including supplements) (or, in the case of windows, skylights and doors, and metal roofs with appropriate pigmented coatings or asphalt roofs with appropriate cooling granules, meets the Energy Star program requirements);
* is installed in or on a dwelling located in the United States and owned and used by the taxpayer as the taxpayer’s principal residence;
* the original use of which commences with the taxpayer; and
* that reasonably can be expected to remain in use for at least five years.
These items can include building envelope components, insulation materials or systems, exterior windows, skylights, doors, storm windows and storm doors, metal or asphalt roofs, advanced main air circulating fans, and qualified natural gas, propane, or oil furnaces or hot water boilers.
Perhaps most important is how one goes about filing these claims. First, keep every single receipt, along with make, manufacturer, and model number on items. You can file these credits alongside your taxes using Form 5695. If you have lots of credits and deductions to take, it might be wise to enlist the help of a tax professional. Also check out http://energystar.gov/taxcredits for more information!
Written by Carla Hill