Time Running Out on Energy Efficiency Tax Credits

Posted by Woodrow Aames ~ November 15, 2010

On midnight December 31, 2010, the Federal tax credit program on renewable energy improvement projects for your home expires. Under the provisions, homeowners can receive Federal income tax credit up to 30 percent of the cost of materials up to $1,500 per appliance or energy efficiency system that you install in your permanent residence. New construction and rental property improvements don't qualify.

Not all ENERGYSTAR appliances qualify for the tax credit, so check with your home improvement or green building supply store before putting down money on materials. There is no upper or lower limit in income requirements for applying for the tax credits.

Energy Efficiency Products and Materials

To qualify for the tax credits for green remodeling, your energy efficiency materials must be purchased and "placed in service" before the end of 2010, according to the ENERGYSTAR website. Just complete the IRS Form 5695 and submit it with your 2010 taxes by April 15 next year. You'll need to include the Manufacturer's Certification Statement for your product in your returns.

Included in the eligible product list are qualified heating, ventilating, and air conditioning units; home insulation; energy-efficient windows, skylights, and doors; roofs; water heaters; solar power products, biomass stoves; geothermal heat pumps; wind turbines, and residential fuel cells.

One of the best ways to determine whether your products qualify is to check with your HVAC, window and door, roofing, plumbing, or remodeling contractor.

Tax credits cannot, however, be carried over beyond 2010 for most of the eligible materials on the list. However, 30 percent tax credits with no upper limit on materials can be carried to future tax years for geothermal heat pumps, solar panels, solar water heaters, small wind energy systems, and fuel cells. So far, the Internal Revenue Service has not established the end date for tax credits for these green, energy efficiency systems.

Incentives Going Forward

This two year tax credit program established originally in 2008 is not likely the last of Federal incentives for homeowners who want to invest in home upgrades. Many states have remodeling initiatives of their own. You can search for your own state incentive programs at the Database of State Incentives for Renewables and Efficiency. You'll find that several states offer property tax incentives for renewables, net metering policies, sales tax incentives on renewables, and policies that promote expenditures on energy efficient products.

8 Responses to “Time Running Out on Energy Efficiency Tax Credits”