Home Energy Tax Credit

Making energy efficient home improvements is becoming easier with home energy tax credits. Over the last few years there has been a variety of energy tax credits given to people who make their home more energy efficient.

Starting with the Energy Policy Act of 2005 the home energy tax credit provided a 10 percent tax credit for the cost of the energy efficient home improvements like insulation systems, windows and skylights, exterior doors, and metal roofs.

The total credit was $500- per property. To encourage home improvements other than new windows the credit that goes towards windows is limited to $200-.

This credit expired in the beginning of 2008 but in 2009 it was revived with a bigger and more enhanced home improvement tax credit.

The 2009 energy tax credit provided 30% of the cost for home improvements "placed in service" between January 1, 2009 and December 31, 2010. The maximum credit allowed per property is $1,500 for those two years.

This upgraded credit includes energy-efficient windows, insulation, doors, roofs, certain window treatments, window film, and heating and cooling equipment for existing homes. To prove that an item qualifies for the tax credit the manufacturer of the product needs to provide a Manufacturer's Certification Statement which certifies that the product is eligible.

Since the home improvement energy tax credit expired on December 31, 2010 a provision for more energy credits was added to the new tax law of December 2010. The energy tax credit was extending until the end of 2011 but the guidelines were reverted to the original amounts of 10 percent of the cost up to $500-.

2012 Tax Returns

None of the home energy credits mentioned above are available for the 2012 tax return however, it's not too late to install a solar or renewable energy system in your home. You have time until December 2016 to install and get back 30% of the cost.

2011 Tax Returns

You can still claim the $500 home improvement credit for energy efficient improvements placed in service before January 1, 2012.

Things you need to know when claiming the home energy credit

  • The credit can be claimed just once per property (starting from 2005) or until its used up (for example $450 in 2009 and $1050 in 2010 or $275 in 2010 and $225 in 2011 [only $500 limit for 2011])

  • It is a nonrefundable credit that cannot be carried over to the next year if you do not have enough taxes to use up the credit

  • You must claim the credit in the year that the home improvement was placed in service.

2009 and 2010 Tax Returns

The $1500 home energy tax credit can only be claimed on your 2009 or 2010 tax return if you placed in service any of the eligible home improvements during 2009 or 2010.

Want to know more about the Home Energy Tax Credit?

Use form 5695 to claim this credit.

Updated December 30, 2012

Go to Federal Energy Tax Credit

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