Energy-Efficient Home Improvements Tax Credits

An error in the Residential Energy Efficiency Property Credit that used to limit the credit to a taxpayers? main house was corrected. The rectification of the erroneous reference that limited eligible heat pumps installed or connected to a taxpayer?s main residence in United States now opens the doors to eligible geothermal heat pumps installed on or in taxpayer?s home in the USA, including their second homes. According to the Residential Energy Efficient Property Credit rules, only eligible fuel cell property is subject to the primary home installation prerequisite.

If you installed solar requirements or insulated your home recently, there are two very important tax credits that you might qualify for. The IRS encourages eligible taxpayers to claim them and ease their tax burdens.

Non-Business Energy Property Credit

This credit seeks to benefit homeowners who have set up energy-efficient equipment in their homes. The value of the credit varies; it was 10% of the cost of the overall of the qualified energy-efficient improvement of up to $5,000 for 2011. Insulation, energy-efficient exterior doors and windows as well as some roofs are some of the qualified improvements.? Installation costs of the listed items doesn?t matter and the credit is extended to installation costs of some high-efficiency heaters and air conditioners, water heaters and stoves that are used to burn biomass fuel. Of the $500 lifetime limit of the credit, only $200 can be used for windows.

Homeowners who have claimed over $500 of energy credits not related to their businesses from 2005 are not eligible for the 2011 credit. Also, to be eligible, the improvements must have been installed and operational by Jan. 1, 2012.

Residential Energy Efficient Property Credit?

This is a tax credit that aims to assist individual taxpayers pay for their qualified energy equipment like solar electricity systems, hot water heaters and wind turbines. The value of the credit is 30% of the eligible property and runs through 2016, without a cap on the credit amount available other than for the fuel cell property. It is possible to include the costs of labor when determining the credit and any unutilized portions of the credit can be carried forward. The eligible system, including the fuel cell property has to be installed on or connected with your home which must be in the USA.

Please note that the tax credit is not open to all energy-efficient improvements. Therefore, ensure that you get tax credit certification statement from the manufacturer, usually available on their websites or on the product packaging.

The two tax credits can be claimed on Form 5695- Residential Energy Credits. These credits are not deductions, and therefore they can lessen the tax amount you owe the IRS dollar for dollar. They can also be claimed regardless of itemization of the deductions on the IRS Schedule A.? Form 5695 is available for downloads from the IRS website. You can also order by calling 1-800-TAX-FORM (800-829-3676).

Source: http://www.limonwhitaker.com/2012/08/energy-efficient-home-improvements-tax-credits/

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