Thursday, March 28, 2013

Tax breaks for energy-saving improvements are back

Few of us are ever looking forward to the April 15th tax deadline. The good news is that Congress revived the tax energy credit for 2012 and 2013. You may be eligible for federal tax credits if you made qualifying energy saving improvements in 2012. If not, plan for those improvements this year and save your receipts!

What is a tax credit?

Unlike a product rebate, you claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay. Generally, a tax credit is more valuable than a tax deduction of the same amount by reducing the tax you pay, dollar-for-dollar as opposed to a percentage.

Who is eligible?

The IRS defines eligibility as individuals who install specific energy-efficient home improvements. Eligibility also requires that the individuals own the home and it must be their primary residence.

What energy-efficient home improvements are eligible? 

The overall $500 cap can be reached in several ways with the purchase and installation of energy-efficient products that meet certain efficiency criteria:

  • Exterior windows: Includes skylights and storm windows 
  • Insulation, exterior doors or roofs: Includes seals to limit air infiltration, such as caulk, weather stripping and foam sealants, as well as storm doors.
  • Metal roofs: Needs pigmented coating or asphalt roofs with cooling granules
  • Central air conditioner, heat pump, furnace, boiler, water heater or biomass (e.g. corn) stove
  • A credit worth 30% of the cost of buying and installing certain alternative energy equipment, such as geothermal heat pumps, solar water heaters, solar panels, fuel cells and small wind-energy systems if installed by December 31, 2016

Here is a list of links that will provide more information on Home Energy Efficiency Tax Credits:

A complete guide to energy-efficient tax credits.

What is eligible for a tax credit?

How to apply for an energy efficiency tax credit.

Learn more about local and regional incentives and rebate programs.

If you are interested in learning more about energy saving strategies for your home, contact your local Pro Energy Consultants.