Real Estate Blog

Did you make an energy efficient improvement to your home this past year? Homeowners who make energy efficient improvements may be able to use tax credits. There are different types of tax credits that can be applied: energy efficiency tax credits and credit for wind, solar, geothermal, and fuel cell tax credits.

Credit for Energy Efficiency

There are many updates that can be made to your home for energy efficiency. This type of tax credit applies to the following energy efficient items:

• Building components

• Furnaces

• Windows

• Air circulating fans

• Insulation

• Roofing

• Doors

• Hot water tanks

Certain requirements apply, so check the tax guidelines prior to buying materials or applying the credit to your taxes. There are maximum deductions on certain upgrades as well. Only work completed on primary residences may be used, and all products must come with at least a 5 year lifespan. Usually, the credit is for 10% of the purchase price up to $500 total. Once a filer reaches the $500 limit, no more may be taken for any future year. This is an overall maximum and not an annual one. 

The Wind, Solar, Geothermal, and Fuel Cell Tax Credit

This credit can be applied to existing properties and new construction, if utilized as a principal home. The credit is not valid for investment properties. People can take a credit for 30% of the final cost of repairs completed between January 1st and December 31st.

The following items are included in this category:

• Geothermal Heat Pumps

• Solar Energy Panels

• Solar Water Heaters

• Small Wind Energy Systems

• Fuel Cells (up to $500 for each 0.5 kilowatt size - other restrictions apply)

Energy Tax Credit Overview For Central Texas Property Owners

With all tax credits, retain receipts to document expenditures. Also retain records on the product information of all purchases as some have additional criteria under the tax laws. If you are uncertain of how to figure out this credit or have many credits, think about using the services of a tax preparer. Additional energy tax credit for property owners is provided at the Energy Star website.