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February 4, 2016
The end of 2015 was a great time for residential energy efficiency and alternative energy.
In addition to extending the tax credits for solar power, Congress chose to continue offering incentives for homeowners to make energy efficiency upgrades to their homes and for builders and manufacturers to build more energy efficient homes.
Adding energy efficient products to your home may cost more up front than standard models, but you will make up for this initial cost and save more in the long run with lower energy bills.
Homeowner tax credits for equipment and improvements in the building envelope
Families living in an existing home as a principal residence are eligible to receive a 10 percent tax credit on the cost of high-efficiency heating, cooling and water-heating equipment products totaling up to $500. If you already claimed the tax credit in previous years (since 2006), you are ineligible for additional tax credits for any new equipment purchases.
According to EnergyStar, the Environmental Protection Agency (EPA) program that helps businesses and individuals save money and protect our climate through superior energy efficiency, the following equipment is covered:
- Biomass Stoves
- Advanced Main Air Circulating Fan
- Air Source Heat Pumps
- Central Air Conditioning (CAC)
- Gas, Propane or Oil Hot Water Boiler
- Natural Gas, Propane or Oil Furnace
- Metal and Asphalt Roofs
- Non-Solar Water Heaters
- Windows and Doors
This tax credit also applies to any energy efficiency improvements made to your home’s building envelope. Installation and labor costs are not covered. Following are some eligible improvements:
- Updating insulation to reduce a home’s heat loss or gain,
- Replacing exterior doors and windows (including skylights) – no more than $200 in total credits can be claimed for windows from years 2006-2016 and/or
- Installing pigmented metal roofs designed to reduce heat gain or asphalt roofs with appropriate cooling granules.
Tax credit limits
You can claim a tax credit for 10 percent of the cost of qualified energy efficiency improvements. However, limits do apply to these improvements, including:
- This credit is worth a maximum of $500 for all years combined, from 2006 to the present.
- Of that combined $500 limit, a maximum of $200 can be used for windows.
- The maximum tax credit for a furnace circulating fan is $50.
- The maximum credit for a furnace or boiler is $150.
- The maximum credit for any other single residential energy property cost is $300.
Visit the Department of Energy’s website for more information on the Residential Energy Efficiency Tax Credit and take advantage of these incentives to make your home more comfortable, your family safer and healthier and to save money on your utility bills before it’s too late!