By Brenda Petersen
Some taxpayers may qualify for a tax credit on their 2013 federal income tax return if they made their home more energy efficient last year. There are two different credits you should know about.
The Residential Energy Property Credit is a nonrefundable personal tax credit available for energy saving property that you added to your main home. Eligible improvements include insulation materials; exterior windows, including skylights; exterior doors; certain roofs; certain heat pump water heaters; and central air conditioners. The credit is 10% of the cost of the energy saving property and has a maximum lifetime limit of up to $500. The maximum credit for windows is $200; central air conditioners, $300; heat pumps, $300; and furnaces, $150. To qualify for the credit, the qualified energy efficiency property expenditures must be made to the taxpayer’s principal residence located in the United States. Not all improvements will qualify, so be sure you have the manufacturer’s credit certification statement usually available on the manufacturer’s website or with the product’s packaging. This credit is available through 2013.
The Residential Energy Efficient Property Credit is a nonrefundable personal tax credit available to individuals for qualified residential alternative energy expenditures. It is equal to 30% of the cost of eligible solar water heaters, solar electricity equipment and fuel cell plants. To qualify for the credit, the installation must be in connection with property in the United States that is used by the taxpayer as a residence, meaning that second and vacation homes will qualify. However, only the primary residence qualifies for fuel cell property installations. There is no limit for most types of property and if your credit is more than the tax, you can carry forward the unused portion to next year’s tax return. This credit is available through 2016.