Residential Energy Credits
The
nonrefundable
Residential Energy Credits are available for individuals who make
energy-conscious improvements in 2011 to the energy efficiency of
their home. There are two credits:
- The Nonbusiness Energy Property Credit, claimed on Part 1 of
Form 5695, is for physical improvements to the home building
itself. This covers energy-efficient insulation, doors, windows,
heaters, air conditioners and the like.
- The Residential Energy-Efficient Property Credit, claimed on
Part 2 of Form 5695, is for investments in alternative energy, such
as solar, wind, geothermal and fuel cells.
Part I - Nonbusiness Energy Property Credit
Updated for 2011 returns: The
Nonbusiness Energy Property Credit has been reduced and limited for
2011. The credit now has a lifetime limit of $500, of which only
$200 can be for windows. Also, now only 10% of eligible
energy-saving home improvements installed in 2011 qualify for the
credit, but are still subject to other stated maximums. There are
also other limits for certain devices, listed below. Finally, the
$500 credit limit is reduced by amounts you received for the credit
in 2006-2010.
Requirements to Claim Credit
- Windows and doors must now meet Energy Star
specifications.
- Woodstoves must have a thermal efficiency of at least 75%.
- Natural gas, propane or oil furnaces or hot water boilers must
have an annual fuel utilization efficiency of at least 95.
- Each item must be installed in your primary home. A
primary home is the home where you live most of the time, including
a house, houseboat, mobile home, condominium, manufactured home, or
cooperative apartment.
- The expenses must be paid or incurred in the current tax
year.
- Purchases made with subsidized energy financing are no longer
elgible for the credit.
Qualifying Items / Expenses
- Insulation material or systems to reduce heat loss or gain
- Exterior windows, including skylights ($200 maximum
credit)
- Exterior doors
- Roofing designed to reduce heat gain
- Residential energy property, including labor costs for the
on-site preparation, assembly or original installation of the
property
- Natural gas, propane or oil furnaces - $150 maximum credit
- Hot-water boilers - $150 maximum credit
- Main air circulating fans used in natural gas, propane or oil
furnaces - $50 maximum credit
- Electric heat pump water heaters - $300 maximum credit
- Natural gas, propane or oil water heaters - $300 maximum
credit
- Electric heat pumps - $300 maximum credit
- Geothermal heat pumps - $300 maximum credit
- Central air conditioners - $300 maximum credit
Part II - Residential Energy-Efficient Property Credit
A credit is also available for investments in alternative energy
for your home. The Residential Energy-Efficient Property Credit
also equals 30% of qualifying improvement costs, with no dollar
limit except for fuel cells. Installation is usually included.
Requirements to Claim Credit
Property and installation costs must be for use in your home
located in the United States. Except for fuel cells, the home does
not have to be your main home.
Qualifying Items
- Solar panels
- Solar water-heaters
- Wind turbines
- Geothermal heat pumps
- Fuel cells, with restrictions:
- The fuel cell must be installed on your main home in the
U.S.
- The fuel cell must have a capacity of at least .5
kilowatt.
- The credit cannot exceed $500 for each .5 kilowatt
generated.
To claim the credit, complete Form 5695 and attach the form to
your Form 1040 or Form 1040A.
For more information, see Energy Incentives in the Recovery
Act.