Do You Qualify for a Home Energy Tax Credit?

Do You Qualify for a Home Energy Tax Credit? 

Every year the IRS and federal government offer a number of tax credits to homeowners based on how they generate and use energy in their home. It's simple, the more efficient your home is the better off your tax return can look. These credits change from year to year as the federal government revises and improves its energy efficiency initiatives. As a homeowner, you need to keep an eye on what tax credits are available in order to receive the maximum refund you are eligible for when filing your tax return, as these credits vary from year to year.  

Large Home Energy Tax Credits-

There are two types of major credits available for homeowners: the Residential Energy Efficient Property Credit and the Non-business Energy Property Credit. These credits are offered based on the type and scale of energy efficiency upgrades added to your home. 

Residential Energy Efficient Property Tax Credit- This is designed to reward homeowners who use renewable energy to help power their home. These include:

• Geothermal Heat Pumps: Geothermal energy is a constant, reliable and renewable source of power. However, getting to it can be expensive. This tax credit is intended to help take the bite out of the purchase.

• Small Wind Turbines (Residential): While not applicable to every region, wind power can be quite resourceful. They can generate power for an individual's home using clean, emissions-free energy!

• Solar Energy Panels: Currently one of the most popular options for energy efficiency, solar power is endlessly renewable (especially in Grand Junction, which offers over 300 days of sunshine per year). If you yield more than you use, you may receive energy credits! 

• Solar-powered Water Heaters: While using photovoltaic panels to capture energy is the most popular form of solar energy efficiency, using solar energy to power large appliances such as your water heater will also earn you a tax credit!

• Fuel Cells: Hydrogen looks increasingly likely to be a powerful source of energy in the years to come, and fuel cells are a key component for storing energy is produces, http://burnanenergyjournal.com/storing-energy-fuel-cells-and-beyond-2/.

The Non-business Energy Property Tax Credit, on the other hand rewards homeowners for installing materials and equipment that meet energy efficiency standards set by the department of energy. These credits only apply to existing homes that serve as your main residence. Keep in mind that new homes cannot take advantage. 

There are two categories of upgrades which determine the amount of credit available to you.

The first category includes,

• Insulation: Insulation helps prevent wasted energy by keeping heat where it needs to be. Since if often wears out over time, you'll need to replace insulation if you want to maximize your efficiency.

• Exterior Doors: Unlike walls, most doors don't have a lot of insulation, so heat will often times pass right through. Replacing your doors with ones that do have insulation makes enough improvement to qualify for a tax credit. 

• Exterior Windows: Windows can let out a lot of energy, similar to doors. Skylights can also qualify for tax credits.

• Roofing: Energy-efficient roofs can help make sure your home isn't wasting to much energy, like insulation. 

Upgrades to these areas in your home are considered "qualified energy efficiency improvements."

The second category includes,

• Electric Heat Pumps

• Electric Heat Pump Water Heaters

• Stoves That Use Biomass Fuel

• Central Air Condition Systems

• Natural Gas, Propane, or Oil Furnace

• Natural Gas, Propane, or Oil Water Heater 

To find our if an item or upgrade meets the Department of Energy standards, you can contact the manufacturer

The tax credit itself includes 10% of the cost of qualified energy efficiency improvements, and 100% of the residential energy property costs. There are a number of limits on both categories, including...

• Maximum of $500 credit for all years combined, 2006 to present. 

• Up to $200 can be used for window

• Up to $150 can be used for a furnace or boiler

• Up to $300 can be used for any other single residential energy property cost

Other Home Energy Tax Credits- Tax credits are also offered on individual energy efficient products, such as ENERGY STAR certifies appliance. These include,

• Electric water heaters

• Gas water heaters

• windows, doors, and skylights. 

Something to keep in mind, if your tax credit is more than you owe, it may 

carry over to the next year.

All of these tax credits can be claimed by using:

IRS Form 5955, Residential Energy Credits.

https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-improvements-qualify/L5rZH56ex