Thursday, December 1, 2011

Home Energy Credit Expires After 2011

A personal income tax credit of $500 is available for certain energy-saving home improvements completed by December 31, 2011.  Prior to 2011 the credit was much larger in amount.  The energy credit expires after 2011, so now is the time to complete any needed improvements to your home that can qualify for the tax credit.  This credit has a lifetime limit of $500 of which only $200 may be claimed for windows.  If you claimed this credit in the amount of $500 or more since 2005, no further credit may be claimed in 2011.  The energy credit may offset the 2011 alternative minimum tax.

The 2011 credit is 10% of the cost of certain energy efficient improvements as follows:
  1. Insulation, exterior windows and doors, and certain roofs.  The cost of installing these items is not included in the credit calculation.
  2. High-efficiency heating and air conditioning systems, water heaters, and stoves that burn biomass fuel.  The cost of installing these items is included in the credit calculation.
Only improvements that meet certain energy savings standards qualify for the credit.  Check the manufacturer's tax credit certification statement before purchasing.

Significant additional tax credits are available for homeowners installing certain alternative energy equipment, such as solar power, geothermal, wind, and fuel cell technologies.  See the IRS website at http://www.irs.gov/newsroom/article/0,,id=249922,00.html for more information.

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