Summary: If you want to make energy efficiency improvements to your home, you’re in luck. The IRS is actually offering you some incentives to do so. However, there are some caveats if you use these tax breaks. What you plan has to qualify for these tax tricks, so make sure they do qualify before you do them if you expect this tax credit from the IRS.
Uncle Sam is on your side when it comes to offering some tax credits for improving your home’s energy efficiency. Unfortunately, he’s only offering some credits and these come with a handful of strings. Still, a tax credit is better than no tax credit.
First, you need to know that energy tax credits can total 30% of expenditures (existing homes only for – windows and doors, metal roofs, insulation, asphalt roofs, ventilating, heating, and air conditioning systems [known as HVACs], non-solar water heaters as well as biomass Stoves) up to $1500 over a 2-year period (tax years 2009 and 2010). The credit is NOT for each year. Further, it is NOT for each adult owner of the home, unless they file separate income tax returns. A husband and wife filing a joint return, for example, could receive up to a single $1500 credit. Two adults (married or living together in the same home) could receive two such credits if they filed separate returns.
Longer-term and unlimited tax credits of up to 30% of the cost also applied. These have no upper limit and are good to 2016 for existing homes in new construction. Expenses may apply to solar water heaters, solar panels, fuel cells, small wind energy systems, and geothermal heat pumps. The tax credit for fuel cells is only limited to $500 per half a kilowatt of power capacity.
Note, too, that installation costs are only allowed for windows, doors, roofs and insulation.
The tax credit can only be claimed for up to what you owe in taxes. That means, if you all after deductions have been accounted for, the credit cannot be claimed. If you don’t owe “enough” taxes to claim the credit, you can’t carry over the credit unless you qualify for longer-term items as described above.
However, you CAN claim both credits, the $1500 credit and the unlimited credit, as long as you satisfy both credits’ requirements.
Next, you will need to ensure that what you are doing qualifies for the credit. It’s best to check with the company (or the manufacturer’s web site) to ensure that they can provide a “Manufacturer’s Certification Statement.” The MCS is a signed statement that comes from the manufacturer, which certifies that the product is qualified for this tax credit. As with anything involving the IRS, be sure to save all receipts and the MCS, just in case the IRS requests them.
Form 5695 should be included when you file your taxes, and it should be the latest draft; the energy tax credit appears on line 52 in this form.
If you think this may be a good way to go to help offset the costs of home improvements for energy efficiency with your own home, visit the Energy Star website for more information. Check back often here, because the managers on the website seem to be keeping information current and answering people’s questions. You can find it at:
http://www.energystar.gov/index.cfm?c=tax_credits.tx_index
Be sure as well to check the IRS rules and talk with your own tax expert, if you have one.
About the author: Jerry Dyess has been in the Texas Electricity business for the past 7 years. He has published many articles on Texas Electric rates.
Tags: energy, Finances / Loans / Mortgages, Home, money, tax, tax credits
Leave a Reply
You must be logged in to post a comment.