Home Improvement Energy Efficient Tax Credits

If you made energy saving improvements to your home during 2011, or if you installed an Earth-friendly energy source, there are two home energy tax credits that you could take advantage of on your 2011 Tax Return.

2011 Energy Efficient Home Tax Credit - The Nonbusiness Energy Property Credit

If you make certain energy-saving or energy-efficient home improvements in 2011, you can get a tax credit for up to 10% of the purchase price of qualified products, up to a maximum amount of $500 for all your home improvements (a maximum of $200 for windows). Some installation and labor costs also qualify for the credit.

The 2011 Energy Efficient Home Credit is only available to those taxpayers who did not claim more than $500 worth of home energy tax credits in an earlier year. If you received home energy credits from tax years 2005-2010, you must subtract the amounts you received from this year's $500 "lifetime" credit cap (the lifetime cap is $200 for windows).

In order to claim this energy credit on your 2011 Tax Return, you must purchase the qualified improvements and place them into service during 2011. To qualify for the credit, the energy-saving improvements must be made on an existing home (not a new construction) which is your primary residence, and which you own.

The Nonbusiness Energy Property Credit is scheduled to expire at the end of 2011.

Energy Saving Home Improvements that Qualify for the Tax Credit

Here are the various energy-efficient products which qualify for the credit, and the maximum amount that can be claimed for each:

$300 for biomass stoves
$50 for advanced main air circulating fans
$300 for air source heat pumps
$300 for central air conditioning
$150 for gas, propane, or oil hot-water boilers
$150 for gas, propane, or oil furnaces
$300 for gas, propane, oil, or electric heat pump water-heaters
$500 for energy-efficient doors (installation costs do not count)
$500 for energy-efficient skylights (installation costs do not count)
$200 for energy-efficient windows (installation costs do not count)
$500 for insulation (installation costs do not count)
$500 for metal or asphalt roofing (installation costs do not count)

Remember that only $500 of all combined qualified costs may be credited.

2011 Renewable Energy Source Tax Credit - The Residential Energy Efficient Property Credit

In addition to the home energy saving credit described above, you could also take advantage of a tax credit for up to 30% of the costs of installing certain renewable energy sources in your home.

Unlike the 2011 Nonbusiness Energy Property Credit described above, this credit is not restricted to your primary residence (except for fuel cells), and it may be claimed for new constructions, but you must own the home (rentals do not count). All installation costs may be included, as well. Better yet, there is no cap or upper limit on the Residential Energy Efficient Property Credit (except for wind turbines and fuel cells--but the caps on those are generous).

The Residential Energy Efficient Property Credit does not expire until December 31, 2016.

Home Energy Sources that Qualify for the Credit

Here are the different energy-efficient products that qualify for the credit:

Geothermal heat pumps
Solar water heaters
Solar panels
Small wind turbines (up to $4,000)
Fuel cells (up to $500 for each 0.5 kilowatt power capacity) (primary residence only)

In addition to home energy credits, there are many other tax breaks and tax deductions available to homeowners.

Learn about other federal tax credits.

See what tax deductions you may qualify for.

Past Year Home Energy Tax Credits

For informational purposes, we will maintain the below information about expired home energy tax credits from previous years:

2009-2010 Nonbusiness Energy Property Credit

You may be able to take advantage of a tax credit of up to 30% of the amount paid or incurred in energy efficiency improvements to your primary home. Improvements that may be eligible include energy-efficient skylights, windows and outer doors, energy-saving water heaters, central air conditioners, and biomass stoves.

There is a $1,500 credit cap over two years (2009 and 2010) that applies to all qualifying property, no matter what type of residence you own, as long as it’s your primary residence and located in the U.S.
You can take advantage of this credit even if you claimed energy credits in past years.

To qualify for the home energy tax credit, improvements must be placed into service after December 31, 2008, and before January 1, 2011.