Have you recently made energy efficient improvements to your home? Find out how you can get an energy efficient tax credit today!
If you care about the environment and saving energy, we’ve got good news for you! If you’ve made certain energy efficient home improvements within the last year may qualify for a tax credit. It looks like all of those headaches you got from installing that solar panel will finally pay off.
Before you get too excited, there are some things you need to know about tax credits and your energy efficient home. Below we’ve laid out the steps you need to take to get a tax credit for all your environmental efforts. Read on, and save some money!
Nonbusiness Energy Property Credit-Say What?
While the name may sound complicated and as stale as a bag of open chips, it’s pretty straightforward. A nonbusiness energy property credit is basically for those people who have energy efficient homes that are not also a business. This credit can go up to 10 percent of the cost of qualified energy-saving gadgets that you’ve added to your home in the last year. So what are these qualified energy-saving gadgets exactly? Well, they include:
- Adding insulation
- Energy-efficient exterior windows
- Energy-efficient doors
- Certain roofs
Keep in mind that this percentage does not include the cost to install these items. We know, and we’re sorry. But, wait! There’s another part of this credit that does include installation costs.
The other part of the nonbusiness energy property credit covers the installation costs for:
- High-efficiency heating and air-conditioning systems
- High-efficiency water heaters and stoves that burn biomass fuel
Depending on the type of property you own, you will receive a different credit amount. You should also know that this credit has a maximum lifetime limit of $500. And if you’re thinking about using all the credit on your brand spanking new energy efficient windows-think again. You can only use up to $200 of the limit for windows. Wondering why? We don’t know. The only thing we can think of is that the IRS has a strong disdain towards windows.
Some Other Things to Know to Know About the Nonbusiness Energy Property Credit
- The home that you claim for the tax credit has to be your main home. It can’t be your second home or a home that doesn’t yet exist.
- Your home has to be located in the US.
- You need to present a written certification from the manufacturer of your energy efficient products that says their products qualify for this tax credit. You can usually find this on the manufacturer’s website or in the box your product came in.
- The deadline for claiming this credit on your tax return is Dec. 31 of every tax year. Remember, you can only claim this tax credit if you haven’t already reached the lifetime limit in past years.
Residential Energy Efficient Property Credit-The Basics
This is the other energy efficient tax credit you could qualify for. In many ways, it’s a better deal than the nonbusiness tax credit, but it all depends on what kind of home you have and what type of energy efficient equipment you’ve installed in the last year.
This tax credit includes 30 percent of the cost of alternative energy equipment installed on or in your home. The best part about this tax credit? It includes the cost of all installation, not just air and heating systems.
Think you’re qualified for this tax credit? Here’s some of the equipment that you’ll need to have installed to meet the qualifications:
- Solar hot water heaters
- Solar electric equipment
- Wind turbines
- Fuel cell property
This tax credit is great because there’s no dollar limit on the credit for most types of property. There are still some things you need to keep in mind with this tax credit:
- Your home has to be in the US, but it does not have to be your main home unless you’re talking about fuel cell property. In that case, it does have to be your main home.
- You can get the tax credit for homes that exist and don’t exist. This doesn’t mean that your imaginary dream mansion gets a tax credit, but homes under construction do.
It turns out that loving the environment can save you some big money on tax credits. Who knew? If you’re interested in receiving these tax credits for the next tax season, consider ways that you can turn your home from an energy sucking monster into an environmentally friendly and sustainable abode.
If you have any questions about energy efficient home tax credits, it’s always a good idea to talk to a tax attorney to find the best tax resolutions for you. Luckily, The W Tax Group is here to help you out with all of your tax credit questions. Give us a call or send us an email to get in touch and save money today!
For more helpful tips, you can also check out our free special report, “5 Questions You Must Ask Any Tax Professional Before You Hire Them.”