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Cut Cost of Home Improvement with Energy Tax Credits
May 30, 2014
For the 2014 tax season, qualified homeowners who have invested in energy efficient features for their homes can cut the cost of home improvement with energy tax credits. The Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit can be applied towards certain energy property expenditures to help make energy-saving retrofits more affordable for homeowners.
1. Nonbusiness Energy Property Credit
Homeowners can claim 10% of the price of eligible property (as listed below), excluding labor or installation costs.
- Qualified energy-efficiency improvements:
- Residential energy property expenditures (as listed below), including expenses for onsite labor costs such as preparation, assembly and original installation.
The Nonbusiness Energy Property Credit has a lifetime limit of $500 for all years after 2005, which can be broken down as follows:
- Windows: $200
- Any advanced main air circulating fan: $50
- Any qualified natural gas, propane for oil furnace, or hot water boiler: $150
- Any item of energy efficient building property, i.e., water heaters and heating and air conditioning systems: $300
If you have already taken a total of nonbusiness energy property credits exceeding $500 in previous years (after 2005), you are no longer eligible to use this credit for your 2013 tax return.
2. Residential Energy Efficient Property Credit
Homeowners can claim 30% of the cost of alternative energy equipment installed in or on their homes, as listed below:
- Solar electric property
- Solar water heating property
- Fuel cell property
- Small wind energy property
- Geothermal heat pump property
The Residential Energy Efficient Property Credit, which is valid until 2016, has no dollar limit for most types of property. If your credit exceeds the tax owed, you can carry the unused portion forward to next year’s tax return.
- One exception to this is fuel cell property, which is limited to $500 for each one-half kilowatt of capacity of the property.
To learn more about residential energy tax credits, talk to your local certified RESNET Home Energy Professional or contact your local IRS office.
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