Requirements for Home Improvement And Residential Energy Efficiency Tax Credits

Residential Energy Efficiency Property Credit is a tax credit you can claim from the Internal Revenue Service (IRS) for the installation of eco-friendly energy sources at your home. This also applies to energy-efficient home improvements you may make to the HVAC system on your property.

The tax credit is available to homeowners across North America. Call us today for Greenville Air Conditioning Serice & Repair.

How Much Tax Credit Can I Claim?

You can avail of three different categories of the federal tax credit when seeking the Residential Energy Efficiency Property Credit. These include:

  • 30% tax credit for a property placed in service before January 1, 2020, and after December 31, 2016.
  • 26% tax credit for property placed in service before January 1, 2021, and after December 31, 2019.
  • 22% tax credit for property placed in service before January 1, 2022, and after December 31, 2022.

Typically, there is no credit limit for most properties that are covered by this refund. The tax credit itself isn’t refundable. However, it is transferable from one year to the next in case you don’t claim the credit in a given year.

In specific cases, the IRS may place a cap on the credit limit, such as in the case of fuel cells. In their case, the limit is at $1,000 per kilowatt of power capacity. So if you have a fuel cell with a 2 kilowatt capacity installed at your home, for instance, you can claim $2,000 in tax credit. For advanced main air circulation systems, the tax credit is typically $50 per property. If you have energy-efficient windows and skylights installed, you can claim $200 per property in lieu of them. For hot water boilers, the typical credit limit is $150 per property.

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Some other home improvements that qualify for the tax credit are listed below, along with the amount that you can claim for them:

  • $150 for energy-efficient gas, propane or oil furnaces
  • $300 for air source heat pumps
  • $500 for energy-efficient doors
  • $500 for insulation
  • $500 for energy-efficient asphalt or metal roofing
  • $300 for energy-efficient central air conditioning
  • $50 for energy-efficient main circulating fans

The amount of the tax credit, as defined by the percentage above, is calculated by taking into consideration the costs of the energy-efficient equipment you install at your home. This includes both the costs of the material or equipment and the installation or labor costs involved.

What is Covered by the Tax Credit?

A huge range of home improvements, energy-efficiency equipment and HVAC enhancements are covered under this category of tax credit. These include the following:

  • Solar-electric properties
  • Solar water heating equipment
  • Geothermal heat pumps
  • Small-scale wind-energy property and equipment running on the wind energy
  • Fuel-cell properties

Requirements for Claiming Tax Credit

The IRS sets forth a number of requirements which must be met if you want to claim this category of tax credit. Following are some of the key requirements you must meet:

  • Your home must be located in North America
  • The home must be in your name if you are claiming the tax credit as the taxpayer.
  • The home doesn’t need to be your principal residence when claiming credit for most properties. However, if you are seeking a credit for fuel cell properties, these must be installed at your main home or residence.
  • The improvement for which you are seeking credit must be functional for at least five years.

How to Seek Tax Credit?

If you intend to seek tax credit for Residential Energy Efficiency Property, you will be required to fill the IRS Form 5695 along with your tax return. You will need older versions of the form if you wish to file a tax credit claim for one of the previous years.

Hiring Reliable HVAC Contractors in Greenville, SC

Tax credit incentives like the Residential Energy Efficiency Property credit are one of the many reasons why you should upgrade your HVAC equipment. In addition to saving you in taxes, such equipment also brings down your annual energy costs, saving you in utility bills.

If you are considering installing energy-efficient HVAC equipment at your home, such as solar water heaters, we can help. Here at General Air, we specialize in all types of HVAC systems with a focus on improved energy-efficiency. We can advice on how best to trim down your HVAC’s energy consumption by choosing the right equipment. Being one of the leading HVAC contractors in Greenville, SC, we take pride in the quality of service we offer. Contact us today to hire our services or consult our experts.

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