The energy-efficient tax credits that were extended through December 31st, 2013 are set to expire again. Those that made energy-efficient improvements to their principal residence may want to go through their receipts to claim the $500 tax credit.
How much is the total energy-efficient tax credit?
Homeowners can claim 10% of the qualifying costs (i.e. insulation, energy efficient windows), up to $500 as a tax credit on their tax returns. In other words, by purchasing $500 worth of loose-fill energy insulation, $50 could be claimed as a tax credit. Please note though that if you claimed the energy tax credit on any tax return since 2006, you cannot use it again in 2013. Therefore, if you qualify for 2013 (purchased energy efficient item(s) and placed in service during 2013), then claim the tax credit on your 2013 return.
Any restrictions for 2013?
Yes, the amount of the credit largely depends on the type of improvement made to the home. For instance, the maximum amount of the credit that you can apply to Energy Star windows is $200. For certain air conditioners, you can claim both materials and labor costs. In addition, you can claim up to $150 for an eligible natural gas, propane or oil furnace or hot water boiler.
Financial Benefits of Energy Efficient Equipment
In addition to lowering your tax bill via the tax credits, your heating bill will also be reduced. Energy Star estimates that the average homeowner that insulates and seals their homes will be able to lower their annual heating and cooling costs by 20% which is equivalent to 10% of their total annual energy bill. In dollar terms, let’s say your average monthly energy bill is $200, your bill will be reduced by $20 each month or $240 a year.
What are the Qualifying Costs to Improve Energy Efficiency?
Adding Insulation
Energy Efficient Exterior Windows & Doors
Roofs (Metal & Asphalt)
Energy Efficient Heating & Air Conditioning Units
Water Heaters & Stoves
NOT the services for hiring a contractor
Make Sure The Home Improvements Are Energy Star Certified
Note that most of the items that you purchase to make the improvements will need to have an Energy Star certification to qualify for this energy credit.
What if I don’t qualify for any energy-efficient federal tax credits?
You can still check with the American Council for an Energy-Efficient Economy website for a detailed listing of state specific tax breaks.
More tax questions? Browse answers or get 2013 tax help or find an accountant online.
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->The Key Tax Breaks That Are Set To Expire At The End Of 2013
->The Home Energy Tax Credits Are Back For 2012 & 2013
->Year End Flexible Spending Account Advice
->What Does The Fiscal Deal Mean For Your 2012 & 2013 Taxes?
->Tax Planning Strategies to Mitigate Your Risk for Higher Taxes in 2013
