Tax Credits for Energy Efficient Home Improvements

eFile Energy Tax Credits

There is one energy tax credit currently available for 2019 Tax Returns: the Residential Energy Efficient Property Credit. You may claim this nonrefundable tax credit on your return if you have any of the following properties placed in service through December 31, 2021 listed below. This means that not only can you claim the credit on your 2019 Tax Return, you may also claim it on 2020 and 2021 Federal Income Tax Returns, as well as 2018 and Prior Year Returns

  • solar electric
  • solar water heating
  • small wind energy
  • geothermal heat pump
  • fuel cell (up to $500 for each 1/2 kilowait of the property's capacity)

Let eFile.com help you if you're confused about energy efficient home improvement tax credits. When you prepare and efile your return on eFile.com, we will select the correct forms for you based on your answers to several tax questions, and we will report any credits on your return if you qualify for them. However, please read on if you want more detailed information on home energy tax credits. 

Residential Energy Efficient Property Credit

If you made energy saving improvements to your home by installing an earth-friendly energy source, you may be able to claim the Residential Energy Efficient Property Credit (that's a long name for a good credit!) for a percentage of your total cost you paid. The percentage amount varies based on the date you placed the service in your home (the amounts are below). For most types of property, there is no dollar limit on the credit. However, if your credit is more that your taxes owed, you can carry over your unused portion of the credit to your tax return for next year.

  • 30%: After December 31, 2016, but before January 1, 2020
  • 26%: After December 31, 2019, but before January 1, 2021
  • 22%: After December 31, 2020, but before January 1, 2022

In order to qualify for the credit, the energy-saving improvements must have been made in a home located in the United States. You must own the home (rentals do not count), but it does not have to be your main home. The credit may also be claimed for newly constructed homes, and all installation costs may be included.

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

  • Solar water heaters
  • Solar panels
  • Small wind turbines

To claim the Residential Energy Efficient Property Credit on your tax return, when you prepare your return on eFile.com, we will prepare Form 5695, Residential Energy Credit, for you and it will be efiled with your return.

Nonbusiness Energy Property Credit

Important: The tax credit below cannot be claimed on 2018, 2019, and later Tax Returns. We will keep this information for 2017 and earlier Tax Returns.  In addition, we'll update this information if the credit becomes available for 2019 and later Tax Year Returns.

If you made certain energy-saving or energy-efficient home improvements in 2017 or earlier, you could 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) made during 2017. Some installation and labor costs also qualify for the credit.

This 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 2005-2011, you must subtract the amounts you received from 2017's $500 "lifetime" credit cap (the lifetime cap is $200 for windows).

In order to claim this energy credit on your 2017 or earlier Tax Return, you must have purchased the qualified improvements and placed them into service during the appropriate Tax Year. To qualify for the credit, the energy-saving improvements must have been made on an existing home (not a new construction) which was your primary residence, and which you owned. The home must also be located in the United States.

You will need to provide tax document to prove that you qualify for the credit. You should have written certification from the manufacturer that produces the qualifying product. This certification is usually included with the product's packaging or posted on the manufacturer's website. Though you can report the information on your tax return, do not include the original documentation in your return; keep it with your tax records.

Home Improvements that Qualify for the 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.

Other Ways to Save on Home Improvements

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