, Answering FAQ'sTurboTax Employee
The information in this article is for Tax Years 2009 and 2010 only. Different credit amounts are available in other years.
If you made energy efficient improvements to your home, you may be eligible for a Residential Energy Credit. The Non-business Energy Property Credit is worth 30 percent of qualified improvements, with a $1,500 maximum for 2009 and 2010 combined.
Eligible home improvements for the credit include:
- Energy-efficient exterior windows, doors and skylights,
- Energy-efficient heating and air conditioning systems,
- Water heaters (natural gas, propane or oil),
- Roofs (metal and asphalt), and
- Biomass stoves
The improvements must be made on your principal residence that is located in the U.S. Any improvements made to your vacation or rental homes do not qualify for the credit.
Homeowners investing in alternative energy for their home, such as solar panels, should also check out a second tax credit designed to spur investment in alternative energy equipment. See Residential Energy Efficient Property Credit below.
How do I know if the energy efficient property I installed qualifies for the credit?
In order to qualify the Residential Energy Credit, the property must meet requirements related to energy savings. A certification statement should be provided by the manufacturer that states the property meets the requirements to claim the credit.
For more information go to energystar.gov.
I purchased a new home that is Energy Star Certified. Do I qualify for the Energy Credit?
The improvements must be made to an already existing home. New construction homes do not qualify for the Residential Energy Credits.
Can I include the cost of installation?
That depends on the type of improvements made to your home. You can include installation costs for energy efficient heating, air conditioners, water heaters and biomass stoves. However, you cannot include the cost of installation for energy efficient windows, doors, skylights, insulation and roofs.
I spent over $5,000 on energy-efficient improvements. Why is my Residential Energy Credit less than $1,500?
The credit is limited by your tax liability. If you do not have $1,500 of tax liability to offset then your credit will be less.
The Residential Energy Efficient Property Credit is available for investments in alternative energy for your home. The credit is worth 30% of eligible costs, with no maximum on the credit, except for fuel cells.
Eligible home improvements for the Residential Energy Property Credit include:
- Solar panels,
- Solar-powered water heaters
- Geothermal heat pumps,
- Small wind energy systems, and
- Fuel cells
The property must be used for your home located in the United States. Except for fuel cells, the home does not have to be your main home.
Generally, the cost of labor is included when calculating the credit.
This credit cannot be taken for equipment used to heat a swimming pool or hot tub.