January 3, 2017
The bad
news: The federal Residential Energy Efficiency Tax Credit expired on Dec. 31,
2016.
The good
news: You can claim a tax credit of up to $500 for qualified systems or equipment
installed during the past year.
The
Residential Energy Efficiency Tax Credit, which expired at the end of 2014, was
renewed by Congress on Dec. 18, 2015. The credit was made retroactive to Jan.
1, 2015, so taxpayers could take the credit for equipment installed in 2015 or
2016.
The credit
applies to energy efficiency improvements in the building envelope of existing
homes and for the purchase of high-efficiency heating, cooling and
water-heating equipment. Efficiency improvements or equipment must serve a
dwelling in the United States that is owned and used by the taxpayer as a
primary residence.
As in
previous years, the maximum tax credit for all improvements made from 2011-2016
is $500. If a taxpayer has already claimed a tax credit of $500 for
purchases made in any previous year, they are ineligible for additional tax
credits on new purchases.
Examples of what products/systems may qualify and
the tax credit amounts:
- Insulation materials and systems designed to reduce a
home's heat loss or gain: 10% of the cost (not including installation cost), up
to $500
- Natural gas, propane, or oil furnace or hot water boiler
with an annual fuel utilization rate of 95 or greater: $150
- Electric heat pump water heater with an energy factor of
at least 2.0: $300
- Central air conditioner which achieves the highest
efficiency tier established by the Consortium for Energy Efficiency: $300
-
Exterior doors and windows (including skylights). Equipment
must meet version 6.0 ENERGY STAR program requirements: 10%
of cost (not including installation costs), up to $200 for windows and
skylights; up to $500 for doors.
The Database of State Incentives for
Renewables and Efficiency (www.dsireusa.org) offers details about the Residential Energy Efficiency Tax
Credit, including instructions for IRS
Tax Form 5695 and the form itself, which you will need to fill out to take the
credit. Consult your tax professional with questions. Also, check www.dsireusa.org to learn of utility rebates for high
efficiency equipment.
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Minnesota Energy Tips is provided twice a month by the Minnesota
Department of Commerce, Division of Energy Resources. Contact the division’s
Energy Information Center at energy.info@state.mn.us or 800-657-3710 with energy questions.
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