Energy Tax Credit Overview For Newton Property Owners

There are two different tax credits available for homeowners who make energy efficient upgrades. Credits directly reduce the tax owed and will, therefore, save money. This blog offers energy tax credit overview for Newton property owners.

Two Different Tax Credits

The Wind, Solar, Geothermal and Fuel Cell Tax Credit

This tax credit is good for existing real estate and new construction, if used as principal residences. The credit is not valid for investment properties. Homeowners may receive a credit for 30% of the actual cost of repairs completed during the calendar year.

The following items fall into this tax credit category:

  • Geothermal Heat Pumps
  • Solar Panels
  • Solar Water Heaters
  • Small Wind Energy Systems
  • Fuel Cells (up to $500 for each 0.5 kilowatt capacity; other restrictions apply)

Credit for Energy Improvements

This credit covers building components, insulation, windows, skylights, doors, roofs, air circulating fans, furnaces, and hot water boilers. There are specific requirements for each item, so check the tax guidelines before applying the credit. There are dollar limits on certain upgrades such as windows. Only repairs to principle residences may be used and all items must have at least a 5 year lifespan. In general, homeowners can take a credit of ten percent of the purchase price up to five hundred dollars. Once the five hundred dollars is reached, no additional amount may be applied in any tax year. This is an overall maximum and not an annual one.

Energy Tax Credit Overview For Newton Property Owners

With all tax credits, keep receipts to document expenses. Also keep the manufacturer and model number of all purchases as some have additional criteria under the tax laws. If you are unsure of whether your purchases qualify for this credit or have a large number of credits in your tax return, consider using the services of a tax expert. More energy tax credit overview for Newton property owners is offered at the Energy Star website. The information in this blog was prepared by Bill Kuhlman at Kuhlman Residential as is intended only as an introduction.