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Accounting Business Tax

Year End Tax Saving Ideas For Individuals – Residential Energy Tax Credits

Residential Energy Tax Credits

If you haven’t taken advantage of energy tax credits for your home, 2011 is your last chance. The credits–10% of cost up to $500 or a specific amount from $50 – $300–expire on December 31, 2011 and only apply to improvements in an existing home that is your principal residence. New construction and rentals do not qualify.

The tax credits are as follows:

  • Energy Star window tax credit: up to $200 maximum
  • Water heater tax credit (includes electric, natural gas, propane, or oil): up to $300 maximum
  • Air conditioner tax credit: up to $300 maximum
  • Insulation, doors, and roof credits: up to the $500 cap
  • Furnace tax credit (includes natural gas, propane, oil, or hot water): $150 maximum. Efficiency must be 95% (up from 90% before the extension)

Caution: Taxpayer is ineligible for this tax credit if this credit has already been claimed by the taxpayer in an amount of $500 in any previous year.

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Getting a Tax Credit for Your Honey Do List

Summer is a great time to tackle home improvements – and, happily, it’s not too late to receive a tax credit when making your home more energy efficient. Although significantly reduced from 2010 levels, energy-efficiency tax credits are still available in 2011.

The home energy credit applies to energy-related improvements, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air-conditioning systems to an existing home that is your primary residence. The tax credit is not available on rental properties or new construction.

The tax credit is 10% of the cost of the home improvement, up to a maximum of $500. There is a lifetime limit of $500, so if you took a $500 credit in 2010, you do not qualify in 2011. The tax credit expires December 31, 2011.

The credit on some items have been reduced below $500:

  • Windows limited to $200; Energy Star qualification.
  • Air conditioners, water heaters, and biomass stoves limited to $300.
  • Furnace and boiler improvements limited to $150 and must meet certain standards.
  • $50 credit for advanced main air circulating fans.

Further, the Residential Energy Efficient Property Credit is a nonrefundable energy tax credit that helps individual taxpayers pay for certain alternative-energy equipment, such as solar hot water heaters, geothermal heat pumps, and wind turbines. The maximum amounts for a credit equal 30% of the cost of qualified property, with no upper limit. This credit expires on December 31, 2016, and is available for new and existing homes, whether primary or second. Rentals do not qualify.

We’re happy to help you sort out the tax credits available for your home improvements this summer. Just give us a call or send us an email.

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