The nonbusiness energy credit was set to expire at the end of 2011; however, when the American Taxpayer Relief Act of 2012 became law, the tax credit was extended through December 31, 2013.
During this past winter, if you noticed your house could use improvements in the energy efficiency department, this just might be the summer to upgrade. There are tax credits available for 10% of cost, up to $500, or a specific amount from $50-$300. The energy credit has a lifetime maximum of $500, so if you took this credit in prior years, that needs to be factored into the overall $500 maximum. If your windows are drafty, there is a $200 credit available (or doors and skylights, $500 credit) if you replace them with a qualifying product. Installation costs cannot be factored into the credit.
Adding adequate insulation is one of the most cost-effective home improvements you can make. Qualified insulation can result in a $500 tax credit. Typical bulk insulation products can qualify, such as rolls, blow-in fibers, and expanding spray. Products that reduce air leaks can also qualify, as long as they come with a Manufacturers Certification Statement.
If heating and cooling systems need to be replaced, there are several categories that qualify for the credit such as:
- An advanced, main, air-circulating fan that blows heated air from your furnace through the duct system has a $50 credit.
- Air-source heat pumps and some central air-conditioning units qualify for a $300 credit.
- Gas, propane or oil hot-water boiler heating units that circulate water throughout the home via a system of baseboard heating units, radiators, and/or in-floor radiant tubing have a $150 credit.
- Natural gas, propane or oil furnaces that use the combustion of fuel and air to create heat qualify for a $150 credit.