New Energy Tax Credits For Homeowners In 2006
There are a few 2006 tax law changes regarding residential energy tax credits that you should be aware of to reduce your tax bill.
Are you wondering if the new energy efficient windows and doors you installed this past year will reduce your tax bill, as well as reduce your energy bill?
That depends on whether or not they "meet or exceed the criteria established by the 2000 International Energy Conservation Code (including supplements) and must be installed in the taxpayer's main home in the United States."
Residential Property Energy Tax Credits Up For Grabs
There are even more residential property energy tax credits available regarding other energy efficient systems or components installed in your nonbusiness (main) home. Please read on for more information on residential energy credits.
I really do not want to mince words regarding tax law, so here is some residential energy property tax credit information straight from Uncle Sam's right-hand man, the I.R.S.:
"The following items are eligible:
*Insulation systems that reduce heat loss/gain
*Exterior windows (including skylights)
*Exterior doors
*Metal roofs (meeting applicable Energy Star requirements).
In addition, the law provides a credit for costs relating to residential energy property expenses. To qualify as residential energy property, the property must meet certification requirements prescribed by the Secretary of the Treasury and must be installed in the taxpayer's main home in the United States.
The following items are eligible:
*$50 for each advanced main air circulating fan
*$150 for each qualified natural gas, propane, or oil furnace or hot water boiler
*$300 for each item of qualified energy efficient property.
The maximum credit for all taxable years is $500 - no more than $200 of the credit can be attributable to expenses for windows.
Additionally, the new law makes a credit available to those who add qualified solar panels, solar water heating equipment, or a fuel cell power plant to their homes in the United States. In general, a qualified fuel cell power plant converts a fuel into electricity using electrochemical means, has an electricity-only generation efficiency of more than 30 percent and generates at least 0.5 kilowatts of electricity.
Taxpayers are allowed one credit equal to 30 percent of the qualified investment in a solar panel up to a maximum credit of $2,000, and another equivalent credit for investing in a solar water heating system. No part of either system can be used to heat a pool or hot tub.
Additionally, taxpayers are also allowed a 30 percent tax credit for the purchase of qualified fuel cell power plants. The credit may not exceed $500 for each .5 kilowatt of capacity.
These items must be placed in service after Dec. 31, 2005 and before Jan. 1, 2008."
Here is the link to Notice 2006-26 regarding the specifics of credit for nonbusiness energy property. A must read if you want to reduce your tax bill and if you meet the requirements outlined above.
Here is Form 5695 that you can print out regarding Residential Energy Credits.
Federal Tax Credits for Energy Efficiency
Source: Internal Revenue Service
- Here is HGTVPro's translation of the above
- If you are using TurboTax this year, Residential Energy Credits can be determined/claimed fairly simple.
- If you have recently installed a new energy efficient water heater, see if it qualifies for the new Energy Tax Credit.
