When tax season rolls around, you’ll do whatever it takes – within the legal limits of the law – to find tax credits and deductions that can save you money.

If you modified your home with energy efficiency in mind, you may qualify for the residential energy tax credit.

As the name suggests, the residential energy tax credit is designed to provide a tax break for qualifying upgrades to your home.

Now that you understand the basics, let’s dive into the finer details so you can determine if you qualify (and how much you can save).

What Improvements Qualify for the Residential Energy Tax Credit?

If you’re making upgrades to your home, you might as well consider if you can get a tax credit to help offset the cost.

According to the IRS, qualified energy efficient improvements include (but are not necessarily limited to) the following:

  • Energy efficient doors, windows, and skylights
  • Roofs (both asphalt and metal) and roofing products
  • Insulation
  • Water heaters
  • Energy efficient HVAC systems

Do Air Source Heat Pumps Qualify?

Thanks to their efficiency, quiet operation and ease of installation, heat pumps are growing in popularity.

When buying a heat pump, consider those that are ENERGY STAR certified to ensure that you qualify for the residential energy tax credit.

According to ENERGY STAR, the tax credit amount is $300. Here are the requirements:

Split Systems:

HSPF >= 8.5

EER >= 12.5

SEER >= 15

Package systems:

HSPF >= 8

EER >= 12

SEER >= 14

Do All Roofs Qualify for the Tax Credit?

When it comes time to install a new roof, there is likely to be one thing on your mind: money!

This is an expensive home improvement project that doesn’t get most people excited. Even so, it’s critical in maintaining the overall condition of your home.

Here’s an excerpt from the ENERGY STAR website explaining what qualifies:

This tax credit is for ENERGY STAR certified metal and asphalt roofs with pigmented coatings or cooling granules designed to reduce heat gain. Certified roof products reflect more of the sun’s rays, which can lower roof surface temperature by up to 100F, decreasing the amount of heat transferred into your home.

Talk to your roofing contractor about available products that qualify for the tax credit.

The tax credit amount is 10 percent of the cost, up to $500. Note: this does not include installation.

What Proof Do You Need?

If you believe you qualify for the residential energy tax credit, there are three things you should do:

  • Review IRS Form 5695, Residential Energy Credits
  • Gather supporting documentation, such as receipts and manufacturer certification statements
  • Contact your tax professional to discuss your eligibility

While we can’t give you financial or tax advice, it’s better to be safe than sorry when it comes to the residential energy tax credit. Gather as many supporting documents as you can, just in case the IRS comes calling.

It doesn’t matter if you’re updating your home with the goal of it being more energy efficient or doing so out of necessity, a thorough understanding of the residential energy tax credit will help you make informed decisions.

Contact us if you have questions about energy efficiency, ENERGY STAR certification, or related subject matter.

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