Everything you need to know about the Energy Tax Credit for 2013
Making improvements to your home not only increase its resale value, they also give you a possible tax deduction. These credits cover energy-efficient home improvements like windows, doors and heating systems. Each category of improvement has its own qualifications to earn the credit. These are the things you need to keep in mind.
You are eligible for this credit if you make an improvement to your primary residence. You receive 10 percent of the purchase price, excluding labor, with a $500.00 cap for all improvements from 2006 to 2013. If you claimed $300.00 in 2006, your claim for 2012 cannot exceed $200.00. Also the credit is only effective for materials that have been installed, not simply purchased.
Windows must be Energy Star-rated and include skylights and storm windows. Replacing a few windows or adding a window to an addition qualifies as long as they meet the other requirements. Windows must have a two-year warranty to demonstrate that they are expected to last five years. The limit you can claim for windows is $200.00.
Most insulation applies, including blow-in, rolls and rigid boards. Other things that qualify include weather stripping, house wrap and caulk or spray foam that are designed to seal air. The material must meet the standards of the 2009 International Energy Conservation Code. If you are unsure, contact the manufacturer or place of purchase to see if they qualify.
Heating and Cooling
Installing a more efficient heating or cooling system, including a new water heater, allows you to claim this credit. Different types of systems have different requirements. For example, a propane water heater must have a different minimum energy factor then an electric or tankless one. Check with your HVAC contractor to figure out which is best for you and is still eligible for the credit. The maximum amount of credit for a new water heater is $300.00. Upgrading your central air conditioner or heat pump system is also allowed under this credit if it meets certain energy efficiency standards. Air source heat pumps and central air conditioners have a $300.00 limit on the credit you receive. Natural gas, propane or oil furnaces and boilers qualify for a $150.00 credit. Systems that qualify will have a manufacturer certification statement attached to them or posted on the manufactures website.
Besides saving you money on heating and cooling your home, energy efficient improvements can earn you a tax credit. Equipment and improvements that qualify have specific requirements and must be Energy Star-rated. Asking your home improvement professional or checking a manufactures website is the easiest way to confirm that what you are buying qualifies for the credit.
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This page is for informational purposes only and should be taken as tax advice. Contact a certified tax professional for further information.