If you’re considering a home-improvement project that will cut energy costs, it’s not too late to take advantage of special federal tax credits. But be aware that time is running out.
The residential energy-efficiency tax credit had been set to expire at the end of 2011. But early this year, as part of the “fiscal cliff” deal, Congress extended it to include projects undertaken during tax years 2012 and 2013.
To qualify for the tax credits – which reimburse homeowners 10 percent of the cost of an Energy Star-qualifying home-improvement project, up to $500 – the improvement must have been made in 2012 or 2013.
Here’s a list of products and appliances that may qualify for a tax credit, but keep in mind that the total credit can’t exceed $500:
• Insulation or insulating material, 10 percent of cost.
• Exterior window or skylight, 10 percent of cost, up to $200.
• Exterior door, 10 percent of cost.
• Metal roof with pigmented coating, or asphalt roof with cooling granules, 10 percent of the cost.
• Advanced main air-circulating fan, $50.
• Natural gas, propane, or oil furnace or hot water boiler, $150.
• Electric heat pump water heater, $300.
• Electric heat pump, $300.
• Central air conditioner, $300.
• Natural gas, propane, or oil water heater, $300.
• Biomass stove, $300.
Here are basic facts about the tax credit:
Taxpayers who took advantage of the full original tax credits from 2006 to 2011 are not eligible for the entire credit. However, if you only used $200 of the credit during that time period, you would still be eligible for $300 this time around.
In order to receive the tax credit for various home-improvement projects, the work must have been done in 2013 and it must be claimed on the 2013 federal income tax form, which is due to be filed by April 15, 2014.
To take advantage of the credits, fill out IRS Form 5695 and provide a copy of the Manufacturer’s Certification Statement, along with a receipt. Your service provider should be able to help you with the certification statement.
To qualify for the credit, the energy-efficient product must be installed in the taxpayer’s primary, owned residence, and must have an expected life span of at least five years. Usually, labor costs don’t count toward tax-credit eligibility.
Also, each improvement must meet government energy-efficiency ratings. For example, a natural gas, propane or oil water heater must have an “energy factor” of at least 0.82 or a thermal-efficiency rating of at least 90 percent. A biomass stove, meanwhile, would need a thermal-efficiency rating of at least 75 percent. For more information, visit energystar.gov.
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