$500 Federal Tax Credit Reinstated for Energy Efficient Homes

The federal government recently voted to retroactively reinstate the tax credit for energy efficiency measures.  This means that you can claim a credit of up to $500 on your federal taxes this year for making your home more energy efficient.

The credit has also been approved for 2016, so if you don’t get to claim your full $500 this time, give us a call and we can schedule Phase II of your project.  Here are the details:

IRS Credits and Deductions Section 25C: Nonbusiness Energy Property Credit.

A credit of 10 percent of the cost of qualified energy-efficient improvements. Qualified improvements include adding insulation, energy-efficient exterior windows and doors, and certain roofs. The cost of installing these items is not included in the credit calculation. Additionally, a credit is available, including the costs of installation, for certain high-efficiency heating and air-conditioning systems, as well as high-efficiency water heaters and stoves that burn biomass fuel. There is a lifetime limitation of $500, of which only $200 may be used for windows. Qualifying improvements must have been placed in service in the taxpayer's principal residence located in the United States through Dec. 31, 2015.

To claim this credit, fill out IRS form 5695 (part II) when you file your taxes this year.

Please note that there is a $500 lifetime limit on this credit – if you’ve claimed it in previous years, you may be out of luck.  If you bought a new furnace, the credit is for 10% of the total contracted amount, up to $500.  If you had insulation, air-sealing, draft-reduction, or similar installed, the credit is for 10% of the MATERIALS portion of your invoice – not the labor.  If you need a copy of your invoice that has the materials and labor costs listed separately, let us know, and we will be happy to provide you with such.

The wording for the credit asks you to get a "Manufacturer's Certification Statement" that you keep for your own records.  It's a letter from the manufacturer, stating that this product is eligible for this specific tax credit.

• If we installed a Navien tankless water heater in your home, use this certification statement.
• If we installed a high-efficiency Goodman furnace, use this certification statement.
• If we insulated your attic, you can use this certification statement for either GreenFiber or TrueSoft cellulose.
• If we spray-foamed your rim joists, or encapsulated your crawl space, use this certification statement.  This is the same statement you would use for "basement air-sealing," "draft reduction," "attic air-sealing," "rigid foam board," and "thermal blocking"
• If we installed Verde or Sunrise windows, use this certification statement.
• If we installed Indow window inserts, use this certification statement.
• Did we leave something out?  just google "manufacturer's certification statement" along with the product name.  Don't know what product we used?  Give us a call.

Of course, this notice should not be interpreted as financial advice or tax preparation advice.  Hopefully it will provide you what you need to start you on the right path to claim this “retroactive incentive!”

To keep up to date on the latest incentive programs, follow this blog, or check out the Database of State Incentives for Renewables and Efficiency at DSIREUSA.org