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Energy Tax Credit: Does Your Home Improvement Qualify?

Energy Tax Credits: Home Improvement Benefits

Energy tax credits are some of the most innovative, practical, and useful methods to reduce your tax liability while simultaneously improving your home’s wellbeing, appearance, and stability throughout the years. Read on to learn more about how we at Americraft can help you with our energy efficient solutions which you then may be willing to utilize to offset a portion of your tax liabilities for the following tax year. We hope you enjoy this article and if you end up valuing the information, feel free to share with family, friends, or colleagues to inform them of the value of energy efficient home renovations!

Residential Renewable Energy Tax Credit

The “equipment” which qualifies for the residential renewable energy tax credit consists of the following:

  • Solar panels (or photovoltaics) for generating electricity: The electricity must be used in the home
  • Solar-powered water heaters: The water heated by the system must be used inside the home, and at least half of the home’s water-heating capacity must be solar. (Solar heaters for swimming pools and hot tubs do not qualify)
  • Wind turbines which generate up to 100 kilowatts of electricity for residential use.
  • Geothermal heat pumps which meet federal Energy Star guidelines.
  • Fuel cells which rely on a renewable resource (usually hydrogen) to produce power for a home. It’s stated the equipment must generate at least 0.5 kilowatts of power.
  • Windows, Doors, & Skylights: If you choose to install energy efficient windows, doors, or skylights; you’re eligible for a tax credit of 10% of the total cost up to $200 for windows and skylights, and $500 for doors.

Renewable Energy Tax Credit Details

According to the U.S. Department of Energy: “you may claim the Residential Energy Efficiency Property Credit for solar, wind, and geothermal equipment in both your principal residence and a second home, yet fuel-cell equipment qualifies only if installed in your principal residence.”. This credit is equal up to 30% of the total cost, including installation. Additionally, there is no upper limit to this 30% tax credit for solar, wind, and geothermal equipment which is great if you happen to live in a very large home and want to reduce your tax liability. However, there is an upper limit for fuel cell tax credits and it consist of $500 for each half-kilowatt of power capacity, or $1000 for each kilowatt.

Details of Nonbusiness Tax Credit

You may choose to claim a tax credit for 10% of the cost of qualified energy efficiency improvements and 100% of residential energy property costs. However, limitations may be imposed as you progress through the process:

  • The credit is worth a maximum of $500 for all years combined, from 2006 to the present year
  • Of the combined $500 limit, a maximum of $200 can be for windows and $500 for doors
  • The maximum tax credit for a furnace circulating fan is $50.
  • The maximum credit for a furnace or boiler is $150.
  • The maximum credit for other single residential energy property costs is $300.

Choose Americraft for Your Energy Efficient Home Improvements

If you’re up for reducing your tax liability and improving your home’s condition, feel free to contact us using the button below and we’ll be sure to respond to your inquiry as soon as possible. We look forward to hearing from you soon and helping you embark on the journey towards eco-friendly improvements!

Disclaimer: Always Consult with Your Tax Specialist(s) Before Engaging with Tax Strategies