ENERGY TAX CREDITS
See also: IRS Publication Energy Incentives for Individuals
Cut Taxes and Save on Energy Bills with Home Energy Credits
You can reduce your taxes and save on your energy bills with certain home improvements. Here are some key facts that you should know about home energy tax credits:
Non-Business Energy Property Credit
* Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
* The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
* This credit has a minimum lifetime limit of $500. You may only use $200 of this limit for windows.
* Your main home must be located in the U.S. to qualify for the credit.
* Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product's packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
* This credit had expired at the end of 2013. The Tax Increase Prevention Act extended it to apply for one year, through December 31, 2014. You may still claim the credit on your 2014 tax return if you didn't reach the lifetime limit in prior years.
Residential Energy Efficient Property Credit
* This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
* Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
* There is not dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year's tax return.
* The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
* This credit is available through 2016.
Use Form 5695, Residential Energy Credits, to claim these credits. For more on this topic refer to the form’s instructions. You can get IRS forms on IRS.gov/forms anytime.
Non-Business Energy Property Credit
* Part of this credit is worth 10 percent of the cost of certain qualified energy-saving items you added to your main home last year. This may include items such as insulation, windows, doors and roofs.
* The other part of the credit is not a percentage of the cost. This part of the credit is for the actual cost of certain property. This may include items such as water heaters and heating and air conditioning systems. The credit amount for each type of property has a different dollar limit.
* This credit has a minimum lifetime limit of $500. You may only use $200 of this limit for windows.
* Your main home must be located in the U.S. to qualify for the credit.
* Be sure you have the written certification from the manufacturer that their product qualifies for this tax credit. They usually post it on their website or include it with the product's packaging. You can rely on it to claim the credit, but do not attach it to your return. Keep it with your tax records.
* This credit had expired at the end of 2013. The Tax Increase Prevention Act extended it to apply for one year, through December 31, 2014. You may still claim the credit on your 2014 tax return if you didn't reach the lifetime limit in prior years.
Residential Energy Efficient Property Credit
* This tax credit is 30 percent of the cost of alternative energy equipment installed on or in your home.
* Qualified equipment includes solar hot water heaters, solar electric equipment, wind turbines and fuel cell property.
* There is not dollar limit on the credit for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year's tax return.
* The home must be in the U.S. It does not have to be your main home, unless the alternative energy equipment is qualified fuel cell property.
* This credit is available through 2016.
Use Form 5695, Residential Energy Credits, to claim these credits. For more on this topic refer to the form’s instructions. You can get IRS forms on IRS.gov/forms anytime.
Get Credit for Making Your Home Energy-Efficient
If you made your home more energy efficient last year, you may qualify for a tax credit on your 2012 federal income tax return. Here is some basic information about home energy credits that you should know.
Non-Business Energy Property Credit
Residential Energy Efficient Property Credit
Non-Business Energy Property Credit
- You may claim a credit of 10 percent of the cost of certain energy saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs.
- In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. Each type of property has a different dollar limit. Examples include the cost of qualified water heaters and qualified heating and air conditioning systems.
- This credit has a maximum lifetime limit of $500. You may only use $200 of this limit for windows.
- Your main home must be located in the U.S. to qualify for the credit.
- Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website or with the product’s packaging.
- The credit was to expire at the end of 2011. A recent law extended it for two years through the end of 2013.
Residential Energy Efficient Property Credit
- This tax credit is 30 percent of the cost of alternative energy equipment that you installed on or in your home.
- Qualified equipment includes solar hot water heaters, solar electric equipment and wind turbines.
- There is no limit on the amount of credit available for most types of property. If your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return.
- You must install qualifying equipment in connection with your home located in the United States. It does not have to be your main home.
- The credit is available through 2016.
Tax Credits Available for Certain Energy-Efficient Home Improvements
The IRS would like you to get some credit for qualified home energy improvements this year. Perhaps you installed solar equipment or recently insulated your home? Here are two tax credits that may be available to you:
1. The Non-business Energy Property Credit Homeowners who install energy-efficient improvements may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements includeadding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. If you’ve claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit for 2011. Qualifying improvements must have been placed into service in the taxpayer’s principal residence located in the United States before Jan. 1, 2012.
2. Residential Energy Efficient Property Credit This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; fuel cell property qualifies only when installed on or in connection with your main home located in the United States.
Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.
If you’re eligible, you can claim both of these credits on Form 5695, Residential Energy Credits when you file your 2011 federal income tax return. Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar. Finally, you may claim these credits regardless of whether you itemize deductions on IRS Schedule A.
1. The Non-business Energy Property Credit Homeowners who install energy-efficient improvements may qualify for this credit. The 2011 credit is 10 percent of the cost of qualified energy-efficient improvements, up to $500. Qualifying improvements includeadding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. You can also claim a credit including installation costs, for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. The credit has a lifetime limit of $500, of which only $200 may be used for windows. If you’ve claimed more than $500 of non-business energy property credits since 2005, you can not claim the credit for 2011. Qualifying improvements must have been placed into service in the taxpayer’s principal residence located in the United States before Jan. 1, 2012.
2. Residential Energy Efficient Property Credit This tax credit helps individual taxpayers pay for qualified residential alternative energy equipment, such as solar hot water heaters, solar electricity equipment and wind turbines. The credit, which runs through 2016, is 30 percent of the cost of qualified property. There is no cap on the amount of credit available, except for fuel cell property. Generally, you may include labor costs when figuring the credit and you can carry forward any unused portions of this credit. Qualifying equipment must have been installed on or in connection with your home located in the United States; fuel cell property qualifies only when installed on or in connection with your main home located in the United States.
Not all energy-efficient improvements qualify so be sure you have the manufacturer’s tax credit certification statement, which can usually be found on the manufacturer’s website or with the product packaging.
If you’re eligible, you can claim both of these credits on Form 5695, Residential Energy Credits when you file your 2011 federal income tax return. Also, note these are tax credits and not deductions, so they will generally reduce the amount of tax owed dollar for dollar. Finally, you may claim these credits regardless of whether you itemize deductions on IRS Schedule A.