Tax season is quickly approaching! Have you made improvements to your home over the last year to improve its energy efficiency? Maybe you are considering home system upgrades and are wondering about the possible tax benefits. The Federal tax credits for making energy efficient improvements continue to be extended in 2011, but at lower levels than in previous years. For 2011 the credit varies depending on the type of improvement.
The improvements in this first list qualify for a tax credit of 10% of the cost of the improvement, up to $500 or a specific amount from $50 - $300. Remember that for these items, installation costs are not included.
-
Insulation
-
Roofs
- Metal roofs with appropriate pigmented coatings
- Asphalt roofs with appropriate cooling granules
- All must meet ENERGY STAR requirements
-
Windows and doors
- Must be ENERGY STAR qualified
- Windows, maximum of $200
Each of the items in the next list qualify for the same tax credit (10% of the cost of the improvement, up to $500 or a specific amount from $50 - $300) but in these cases, installation costs can be included in the cost calculations:
-
Furnaces & boilers
- Natural gas, propane, oil, hot water
- Capped at $150
- Must meet 95AFUE
-
Advanced main air circulating fan
- Capped at $50
- Must use no more than 2% of the furnace’s total energy
-
Central air conditioners
- Capped at $300
- Split systems: SEER > 16, EER > 13
- Package systems: SEER > 14, EER > 12
-
Air source heat pumps
- Capped at $300
- Split systems: HSPF>8.5, EER >12.5, SEER >15
- Package systems: HSPF > 8, EER >12, SEER >14
-
Water heaters
- Natural gas, propane, oil
- Capped at $300
- Energy factor > 0.82 or thermal efficiency at least 90%
-
Electric water heaters
- Capped at $300
- Energy factor > 2.0
-
Biomass stoves
- Capped at $300
- Thermal efficiency rating at least 75%
To claim the credit, the improvements must be made to an existing home that is your principal residence. New construction and rentals do not qualify. A lifetime limit of $500 is now in effect. Therefore, if you have already received $500 in these tax credits from tax years 2006-2010, you are not eligible for any additional energy tax credits.
The following improvements still qualify for 30% tax credit with no maximum limit:
-
Geothermal heat pumps
-
Solar energy systems
-
Small wind turbines
In the case of these items, the credit applies to existing homes and new construction for principal residences and second homes. Rentals do not qualify. Installation costs are included in the credit.
The following qualifies for a tax credit of 30% of the cost (installation costs included), up to $500 per .5kW of power capacity:
-
Fuel cells
- Residential fuel cell and micro-turbine system
- Efficiency of at least 30% and capacity of at least 0.5kW.
The credit applies to existing homes and new construction that will serve as your principal residence. Rentals and second homes do not qualify.
Please note:
-
Not all Energy Star qualified products qualify for a federal tax credit.
-
No federal tax credits are given for appliances.
We recognize that for many private taxpayers it is a challenge to stay on top of the ever-changing tax laws. The tax team here at “Your Best Interest” Financial Services, Inc. stays current on tax law changes by continually attending educational seminars and reading professional tax publications. Jackie Ward, the YBIFS Tax Operations Manager, will be posting here occasionally over the next few months to provide you with relevant information in an easy-to-understand format. Remember, our tax department is available to assist you year round, not just during tax season. If you ever need help, or just have a question, please call Jackie at 610-485-1010.
Stay tuned…
This is a guest blog by Jackie Ward, the Tax Operations Manager at “Your Best Interest” Financial Services, Inc.
Securities offered through Trustmont Financial Group (TFG) Inc. Member FINRA/SIPC. Advisory services offered through Trustmont Advisory Group (TAG) Inc. 200 Brush Run Road, Greensburg, PA 15601 724-468-5665 Neither “Your Best Interest” Financial Services, Inc. nor 401kPRO are affiliated with TFG or TAG.
Comments