If you have done any work on your house to make it more energy efficient before January 1, 2012, you may be able to claim a credit on your tax return!
There are two credits the IRS call
- Nonbusiness Energy Property Credit and
- Residential Energy Efficient Property Credit.
These credits were supposed to expire in 2010 but were extended by one year to 2011 and have new rules and limitations.
The Nonbusiness Energy Property Credit is a nonrefundable credit that relates to your primary residence. The credit rate for 2011 is 10 percent of the qualified energy efficiency improvements cost. Qualifying improvements can be replacing items such as
- exterior doors,
- windows,
- insulations,
- heat pumps,
- furnaces,
- water heaters or
- central air conditioning
The maximum lifetime limit is $500, which means that if you have already claimed this credit on a previous tax return, you may not be eligible to take it again, if your earlier credit was equal to or over the $500 maximum. Qualifying improvements must have been installed during certain time frames; before January 1, 2008, or after December 31, 2008 but before January 1, 2012.
The Residential Energy Efficient Property Credit has been established to help taxpayers pay for residential alternative energy equipment in their primary residence. The credit equals 30 percent of what the taxpayer spent on the qualifying equipment and can include labor costs. This relates to the costs of
- eligible solar water heaters,
- solar electric equipment,
- fuel cell plants,
- qualified small wind energy property and
- qualified geothermal heat pump property
These pieces of equipment must be installed before January 1, 2017. There is no set maximum for this particular credit, except for the fuel cell plants. However, there is a limit on the amount of nonrefundable personal credits a taxpayer can claim in one year. Any amount over this limit can be carried forward to the next year.
It is important to know that not all energy efficient improvements qualify for these tax credits, so you should check the certifications of the products before you begin improvements. These credits can be claimed on Form 5695 when you file your 2011 tax return. Keep in mind that it is best to consult a tax professional before claiming these credits!