Going green will save you green. There were two tax credits available to taxpayers in 2011 for their efforts to conserve energy and make their homes more green friendly. These tax credits were the Nonbusiness Energy Property Credit and the Residential Energy Efficient Property Credit. If eligible, homeowners can claim these tax credits on Form 5695 when their 2011 tax return is prepared and filed. Remembers, tax credits are not deductions. Tax credits will reduce your tax liability dollar for dollar.
The Nonbusiness Energy Property Credit for 2011 is less attractive than it was in previous years, but is still worth pursuing if you are eligible. To be eligible, you must have made energy efficient improvements such as insulation, replacing exterior windows, doors, and certain roofs. This tax credit may also be claimed for the cost of high-efficiency heating and cooling systems and hot water heaters, including labor costs. These energy efficient improvements must be made to the taxpayer’s principal residence located in the United States by December 31, 2011. Taxpayers may claim 10% of the cost for these improvements, up to $500. Taxpayers may only claim $200 for windows and if more than $500 has been claimed in previous years, this tax credit cannot be claimed in 2011.
Taxpayers may also benefit by going green in 2011 by claiming the Residential Energy Efficient Property Credit. This tax credit is equal to 30% of the cost of qualifying property, including labor. Examples of qualifying property include solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. There is no limit on the amount available for this tax credit.
Having issues determining if your energy efficient improvements will qualify for this year’s tax credit? Please feel free to contact me to discuss.