Each year, the IRS and the federal government offer homeowners a range of tax breaks depending on how they produce and use energy in their homes. The more energy-efficient your home is, the more credit you will get.
These home energy tax credits change from year to year as the federal government reviews and improves its energy efficiency initiatives. As a property owner, you want to keep an eye on your tax credits when filing your tax return in order to get the maximum refund you are entitled to.
There are two types of owner's energy credit here: the Non-Business Energy Property Credit and the Residential Energy Efficient Property Credit.
Residential Energy Efficient Property Credit
You can get this deduction if you make energy-efficient upgrades to your home. It can be your existing house, but it can also be a house under construction. This house doesn't have to be your primary residence (unless the credit is for fuel cells), but it must be in the United States.
What is the value of the credit?
The Residential Energy Efficient Property Credit can represent up to 30% of the cost of qualifying property. You can include any labor costs incurred for the onsite preparation, assembly, or initial property installation.
What type of property is eligible?
Alternative energy systems such as fuel cells, small wind turbines, solar power, solar hot water, and geothermal heat pumps may qualify for the credit. For this credit, you can rely on the manufacturer's written statement that a product is eligible for the credit.
Non-Business Energy Property Credit
This home energy tax credit reimburses you up to 10% of the amount paid or incurred for eligible energy efficiency improvements installed during the year, plus any energy costs for residential buildings.
Your total credit cannot exceed the lifetime limit of $ 500 for all years after 2005. Of this credit, only $ 200 for windows, $ 50 for each advanced air circulating fan, $ 150 for any eligible propane, natural gas, hot water boiler or oil furnace, and $ 300 for ent item of an energy-efficient property.
What type of property is eligible?
The following improvements may be used for credit if they meet certain energy efficiency requirements:
• Insulation materials or systems specifically and originally designed to reduce heat loss
• Exterior windows, including skylights
• Exterior doors
• All metal or asphalt roofs with pigmented coats or cooling granules which have been specially and primarily developed to reduce heat build-up in the house
The following residential energy properties are also eligible:
Certain electric heat pump water furnaces; electrical heat pumps; central air conditioning; Natural gas, propane or fuel oil boilers; and biomass fuel stoves
Eligible natural gas, propane or oil heaters
Some advanced types of air circulating fans used in natural gas, propane or oil heaters.
Don't worry about when these tax credits expire. Congress has extended the two home energy tax credits several times. Some lawmakers want to make both loans permanent and even extend them.
Learn more about the energy tax credits on our website National Tax Reports