Tax Credits for Energy Efficient Home Improvements
There is one energy tax credit currently available for 2018 Tax Returns: the Residential Energy Efficient Property Credit for solar electronic property and solar water heating property. If you're confused about energy efficient home improvement tax credits, let eFile.com help you. 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.
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 take advantage of the Residential Energy Efficient Property Credit (that's a long name for a good credit!). The credit could be worth up to 30% of the total cost of installing certain renewable energy sources in your home. It is not restricted to your primary residence, and it may be claimed for newly constructed homes. However, you must own the home (rentals do not count). All installation costs may be included. Better yet, there is no cap or upper limit on the Residential Energy Efficient Property Credit (except for on wind turbines and fuel cells--but the caps on those are generous).
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.
The Residential Energy Efficient Property Credit for solar electronic property and solar water heating property is currently available for property placed in service through December 31, 2021. Therefore, it will be available to claim on 2018-2021 Tax Year Returns.
In order to qualify for the Residential Energy Property Credit, the energy-saving improvements must have been made in a home located in the United States. However, it does not have to be your main home.
Here are the different energy-efficient products that qualify for the credit:
- Solar water heaters
- Solar panels
- Small wind turbines up to $4,000
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 Credits, for you and it will be efiled with your return.
Nonbusiness Energy Property Credit
Important: The tax credit below cannot be claimed on 2018 Tax Returns. We will keep this information for 2017 and earlier Tax 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 You Can Save on Home Improvements