Having an energy-efficient house is a great way for homeowners to save more money on their electric bills and lower the strain on the environment; however, the benefits don’t end there – having an energy efficient home can also make an individual eligible for certain tax credits. If you made improvements or installed any energy saving equipment in your home in 2015 or 2016, you may be entitled to some of these tax benefits. This tax credit is set to expire on December 31, 2016.
If you have had any energy efficiency equipment installed in 2015 or 2016, you may be eligible to receive this credit. The most any individual can claim for their equipment is $500. This means that, if you have already maxed out your claim, you cannot claim again. And, if you have already claimed $200 worth of credit, you can only claim a maximum of $300 this year. The tax credit cap is on all improvements made up to 2016. Even if you had not claimed any money since 2011 when you claimed all $500, you could not claim again even if you have made additional improvements or purchases.
The tax credit includes improvements on existing homes and purchases of equipment for high-efficiency heating, cooling, and water-heating techniques. You can only claim these credits if you own the home that has been modified and uses it as your primary residence.
Listed below are the different types of improvements and purchases, and how you can claim them.
Building Envelope Improvements
If you have had your home upgraded to have higher energy efficiency, you are eligible for a tax credit worth 10% of the total cost. While labor and installation cannot be claimed, you can still claim the cost of materials up to $500. To receive this tax credit, the home improvement has to meet the standards of the 2009 International Energy Conservation Code. Listed below are the following improvements that can be used toward the tax credit:
Insulation materials and systems whose purpose is to lower a home’s loss or gain of heat.
Replacement doors, windows, or skylights that meet the 6.0 Energy Star program requirements. The cap on the window credit is a maximum of $200 between the years of 2006 and 2016.
Energy-efficient roofs. This includes pigmented metal roofs that are manufactured to reduce heat in the home or asphalt roofs that include cooling granules. These roofs must meet the Energy Start specifications to be included in the tax credit.
If you purchase certain energy-efficient equipment for heating, cooling, and water-heating, it may count toward part of the tax credit. While the credit may cover the entire cost of the purchase, there are certain caps on some products. Listed below are the equipment and the limit of credits available:
- Fans for advanced main air circulation- $50
- Natural gas, propane, or oil furnace, or hot water boiler. These products must have a rate of fuel utilization of at least 95 - $150
- Natural gas, propane, or oil water heater. This equipment must have at least 90 percent thermal efficiency or a 0.82 or higher energy factor. -$300
- Electric heat pump water heater. This must have an energy factor with a minimum of 2.0. -$300
- Energy heat pump. This must meet the highest level of efficiency set forth by the Consortium for Energy Efficiency -$300
- Central air conditioner. Must meet the Consortium for Energy Efficiency’s highest level of efficiency -$300
- Biomass stoves. These stoves must use fuel from plants such as crops, trees, wood, plants, grasses, or fibers with a thermal efficiency of at least 75 percent. -$300
Started in 2005, the tax credit for energy improvements was set forth to help people become more energy-efficient through improvements on their existing homes. While the credit was only supposed to last through 2007, it continued to be reinstated making it possible for more people to enjoy these fantastic benefits.