Homeowners who took 2016 to make their homes more energy efficient may be eligible for certain tax credits. The federal government offered two credits for the 2016 tax year, including the Nonbusiness Energy Property Credit and the Residential Energy Efficiency Property Credit. These credits are good through the 2016 year, except for any of the solar credits, which are valid through 2019 and then reduced each year to the end of 2021.
Nonbusiness Energy Property Credit
You may qualify for this tax credit if the equipment or materials you installed meet the Department of Energy’s technical efficiency standards. If you ask the manufacturer of the item you are installing whether or not it meets these standards, they will be able to let you know.
There are two major categories of home upgrades that the IRS identifies:
For qualified energy efficiency improvements you can claim 10% of the cost and for residential energy property costs, you can claim 100% of the cost, with some limitations.
- The maximum credit allowed is $500, for any updates from 2006-present
- Out of the total $500 max, only $200 can come from window upgrades
- Max credit for boilers or furnaces is $150
- Max credit for furnace circulating fans is $50
- Max credit is $300 for any other single residential energy property cost
Residential Energy Efficiency Property Credit
The equipment that falls under this category includes wind, geothermal, solar, and fuel-cell technology. Examples of qualifying equipment includes wind turbines, solar water heaters, solar electrical equipment, certain geothermal heat pumps, and fuel cells that rely on any sort of renewable source, like hydrogen, to create power.
You are able to receive a tax credit for 30% of the overall cost to install the alternative energy equipment. With this tax credit, there is no limit to the amount of credit you can receive, however, for fuel cells the max credit is $500 for every half-kilowatt or $1,000 for every kilowatt.
Receive Credit for Your Energy Efficiency Improvements
In order to claim these credits, you must file Form 5695 with your tax return. If you are interested in making your home more energy efficient in 2017 so you can start saving money and earn greater tax credits for next year, call 72 Degrees Air Conditioning & Heating.
We serve all of Kerrville and Fredericksburg, TX with their HVAC needs – Available 24/7!