Taxpayers May Qualify for Expanded Home Energy Tax Credits

Taxpayers who make energy efficient updates to their primary residences this year could be entitled to home energy tax credits, such as the Energy Efficient Home Improvement Credit and the Residential Clean Energy Credit. To learn more about who qualifies for these credits, or for help with another tax-related question or concern, reach out to our legal team today.

The Energy Efficient Home Improvement Credit 

Individuals who make certain energy-efficient improvements to their primary residences this year could qualify for a tax credit of up to $3,200. This credit equals 30 percent of energy efficient improvements made during the year, such as:

• Replacing outdated exterior doors, windows, and skylights;
• Installing new insulation and air sealing systems or materials;
• Installing central air conditioners;
• Installing natural gas, oil, or propane water heaters;
• Installing propane, oil, and natural gas hot water boilers; or
• Installing heat pumps, water heaters, and biomass stoves and boilers.

The maximum amount of this credit that can be claimed by a taxpayer is:

• $1,200 for energy property costs and home improvements; and
• $2,000 for qualified heat pumps and biomass stoves and boilers.

The credit is also only available for modifications made to existing homes and not to newly constructed residences. It is also nonrefundable, which means that taxpayers are not able to obtain more from the credit than what is owed in taxes. Excess credits also can’t be carried over to the next year.

The Residential Clean Energy Credit 

Taxpayers who invest in energy improvements in their primary residences may also qualify for a yearly residential clean energy tax credit, known as the Residential Clean Energy Credit. This credit is available to homeowners who invest in any of the following:

• Solar electric panels;
• Solar water heaters that have been certified by the Solar Rating Certification Corporation or another state-endorsed entity;
• Wind turbines;
• Geothermal heat pumps that meet Energy Star requirements at the time of purchase;
• Fuel cells; and
• Battery storage technology with a capacity of at least three kilowatt hours.

This credit is equal to 30 percent of the cost of new qualifying clean energy modifications and unlike the Energy Efficient Home Improvement Credit, also applies to expenditures incurred in both existing homes and newly constructed residences. It has no annual dollar limit and taxpayers can carry forward any unused credits and apply them to the next year. Taxpayers can claim this credit by filling out Form 5695, Residential Energy Credits, each year that qualifying improvements are installed until the credit starts to phase out in 2033.

Reach Out to an Experienced Florida Tax Attorney for Help 

To speak with a skilled CPA, former FBI Special Agent, and experienced Florida and nationwide tax attorney about the home energy tax credits for which you could qualify, call Ronald Cutler, P.A. at 386-490-9949 and set up an appointment today. You can also reach a member of our legal team by completing one of our brief online contact forms. We are standing by and ready to get started on your case today.

Sources: 

irs.gov/newsroom/irs-going-green-could-help-taxpayers-qualify-for-expanded-home-energy-tax-credits

irs.gov/credits-deductions/frequently-asked-questions-about-energy-efficient-home-improvements-and-residential-clean-energy-property-credits-qualifying-residence