Did you know that some home improvements qualify for energy tax credits? Not only will you be saving in the long run on your energy bills, but these tax credits make your energy efficiency upgrades more affordable in the first place!
1. Non-business Energy Property Credit
Homeowners can claim 10% of the price of the eligible property (as listed below), excluding labor or installation costs.
- Qualified energy-efficiency improvements:
- Insulation that reduces heat loss or gains.
- Exterior windows, skylights, or doors.
- Storm windows and storm doors installed over certain types of windows and doors.
- Metal and certain asphalt roofs designed to reduce heat loss or gain.
- Residential energy property expenditures (as listed below), including expenses for onsite labor costs such as preparation, assembly, and the original installation.
- Electric heat pumps.
- Central air conditioner.
- Natural gas, propane, or hot water boilers.
- Natural gas, propane, or oil furnaces.
- The advanced main air-circulating fan used in natural gas, propane, or oil furnace.
- Biomass fuel stoves.
The Nonbusiness Energy Property Credit has a lifetime limit of $500 for all years after 2005, which can be broken down as follows:
- Windows: $200
- Any advanced main air circulating fan: $50
- Any qualified natural gas, propane for oil furnace, or hot water boiler: $150
- Any item of energy-efficient building property, i.e., water heaters and heating and air conditioning systems: $300
If you have already taken a total of nonbusiness energy property credits exceeding $500 in previous years (after 2005), you are no longer eligible to use this credit for your 2014 tax return.
2. Residential Energy Efficient Property Credit
Homeowners can claim 30% of the cost of alternative energy equipment installed in or on their homes, as listed below:
- Solar electric property
- Solar water heating property
- Fuel cell property
- Small wind energy property
- Geothermal heat pump property
The Residential Energy Efficient Property Credit, which is valid until 2016, has no dollar limit for most types of property. If your credit exceeds the tax owed, you can carry the unused portion forward to next year’s tax return. One exception to this is fuel cell property, which is limited to $500 for each one-half kilowatt of capacity of the property.
To learn more about residential energy tax credits, contact a tax professional or your local IRS office.
If you’re interested in making the smart move to upgrade to energy-efficient air conditioning and/or heating, call us here at AC Express at (512) 866-5520. An expert technician will happily guide you through the process of choosing the right equipment for your home.