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Tax Credits for Residential Energy Efficiency Upgrades

August 19, 2013

Certain “green” or energy-efficient improvements to your home are eligible for tax breaks.

Certain energy related tax credits that were available in 2012 have been extended through 2013. If you make your home more energy efficient in 2013, you may qualify for a tax credit on your 2013 Federal income tax return. Here is some basic information about home energy credits that you should know.

Non-Business Energy Property Credit - (Extended to the end of 2013)-A nonrefundable tax credit is available to individuals for the installation of non-business energy property. There is generally no income limitation to the credits, which means most taxpayers can take advantage of the credits regardless of the amount of their taxable income.

  • You may be able to claim up to 10 percent of the cost of certain energy saving property that you add to your main home. Examples of qualified additions include: insulation, windows, doors and roofs.
  • In some cases, you may be able to claim the actual cost of certain qualified energy-efficient property. This could include the cost of qualified water heaters and qualified heating and air conditioning systems.
  • Each type of property has a different dollar limit. This maximum lifetime limit of the credit is $500. Only $200 of this limit can be used for windows.
  • The property must be your principal residence and must be located in the U.S. to qualify for the credit.
  • Not all energy-efficient improvements qualify, so be sure you have the manufacturer’s credit certification statement. It is usually available on the manufacturer’s website, from the vendor or with the product’s packaging.

Residential Energy Efficient Property Credit - (Available through 2016) - A nonrefundable tax credit is available to assist individual taxpayers in paying for residential alternative energy equipment. Like the Non-Business Energy Property Credit, there is generally no income limitation, so most taxpayers are eligible for the credit.

  • This tax credit is 30 percent of the cost of the qualified alternative energy equipment.
  • Qualified equipment includes solar hot water heaters, solar electric equipment and qualified wind turbines.
  • There is no limit on the amount of credit available (for the majority of properties) and if your credit is more than the tax you owe, you can carry forward the unused portion of this credit to use towards next year’s tax return.
  • You must install qualifying equipment in connection with your home located in the U.S. The residence does not have to be your principal residence.

For more information on energy tax credits or for help claiming your 2012 or 2013 credit please email Robert D’Andrea, CPA or call 888-KLR-8557.

KLR’s tax professionals are CPA’s and attorneys who have specialized training and experience in the Boston marketplace in all matters of Federal, State and local tax issues. They have expertise in compliance reviews, nexus studies, voluntary disclosure issues, transfer pricing, M&A assistance, cost segregation studies and research & development tax credits.

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