Tax Incentives for Home
Improvements That Reduce Energy Consumption
By
Shaun Bestby in Global Warming is
Real
Homeowners can save up to $500 with the Tax Incentives Assistance Project (TIAP). TIAP is a public interest collaboration that gives homeowners access to tax incentives for upgrading their home appliances and heating and cooling equipment to meet energy-efficiency standards.
Time
is running out. Residential tax incentives for both existing home credits and
new home credits are slated to expire at the end of 2013. Here’s what you need
to know:
Qualified Equipment
Consumers
can check with retail suppliers, installation professionals or manufacturers
for more details about the brands and specific models included in the incentive
program. Currently, the following upgrades are eligible for incentives.
- Furnaces – gas, propane and oil
- Biomass stoves – stoves that run on pellets, corn or wood chips
- Geothermal heat pumps
- Central air conditioning systems and air source heat pumps
- Water heaters
- Fans for both heating and cooling systems
In
addition to appliance upgrades, incentives provide tax relief for upgrading
building envelope materials, which include items such as windows, exterior
doors and roofing materials that have cooling components built in to reduce
energy consumption for heating and cooling interior space.
Installation Requirements
Rental
property is not eligible for TIAP credits. The purchaser must occupy the
residence where equipment is scheduled to be installed. For new purchases,
equipment must be installed after move-in is complete.
Tax
credits up to $2,000 are available for builders that install energy-efficient
appliances and incorporate building materials that significantly reduce energy
use and/or meet Environmental Protection Agency guidelines under the Energy
Star Homes programs.
Documenting Equipment Purchases
Each
piece of equipment must be certified as an energy-efficient product, and that
certification should be kept on file with the tax return for the year the
credit is claimed. Taxpayers are not required to provide a copy of the
certification with the IRS form 5695 to claim the credits. However, in the
event of an audit, it must be available for review.
Additional Discounts
One
way homeowners and renters can save money on electric bills is to compare
energy suppliers, according to energysavings.com. Prices vary by almost 10 percent in some communities,
depending on the state of residence and the length of contract. Comparing rates
for a variety of suppliers enables consumers to choose the lowest rates and
explore which companies have the best policies for the environment, too.
Additional Tax Incentives
There
are numerous tax incentives and credits available for vehicles with sustainable
features and ratings. Renewable energy, fuel cells and electric vehicle tax
credits are also at the top of energy-efficient credits available for
individuals and business owners.
The
Residential Energy Efficient Property Credit has some appealing features for
most homeowners. The credit does not expire, and it covers up to 30 percent of the equipment’s purchase price. Eligible appliances
include solar electric equipment, solar water heaters and wind turbines.
One
advantage for this particular credit is that amounts in excess of the tax
liability can be claimed the next year. This credit is available until 2016,
and non-primary residences are eligible for the credits.
——————–
Shaun
is an environmental consultant, having previously worked in government
environment agencies.