If you’re thinking about getting more energy-efficient with your home to cut your energy costs long-term, there’s another reason you might want to go ahead and move forward: tax savings. The IRS reminds taxpayers that there are two credits you can take advantage of.
- The Non-Business Energy Property Credit allows you to deduct 10 percent of the cost of certain qualified energy-saving items added to a main residence in 2015 — insulation, windows, doors and roofs. The credit also allows you to deduct the full cost of water heaters and heating and air conditioning systems. This credit has a maximum lifetime limit of $500 (and you may only use $200 of this limit for windows). To qualify, your residence has to be in the U.S., and you have to have written certification from the manufacturers. Under current law, this credit is available through Dec. 31, 2016.
- The Residential Energy Efficient Property Credit allows you to deduct 30 percent of the cost of alternative energy equipment installed on or in your home — solar hot water heaters, solar electric equipment, wind turbines and fuel cell property. This credit is especially advantageous because there is no dollar limit for most types. Plus, if your credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return. To qualify, the home must be in the U.S. This credit is available through 2016.
To claim these credits, you’ll use Form 5695, Residential Energy Credits.