A little known provision of the American Taxpayer Relief Act that was passed to keep us off the fiscal cliff also brought back tax credits for energy-efficient home improvements. And they have been made retroactive to 2012 in addition to qualifying homeowners making improvements in 2013. According to the Akron Beacon Journal, the legislation essentially erased the old expiration date ending in 2011 and set a new deadline of December 31, 2013.
The home energy improvements must be made to the taxpayer’s principal residence and must be place in service by the end of this year unless Congress further extends the credits. IRS Form 5695 is the form to use when filing your federal tax return and the credit is applied to either taxes you owe or the refund you will receive. To get the credit, you are required to have a manufacturer’s certification statement, which is a signed statement from the manufacturer stating that the product you purchased qualifies for the tax credit. While you do not have to submit the certification to the IRS, you should keep it in your files in case of audit. Some manufacturers provide the certification on their website; if not available there, you may need to get it from your contractor.
Here are the tax credits available:
- 10 percent of the cost of insulation materials and systems, not including installation.
- 10 percent of the cost of qualifying exterior doors, windows and skylights, not including installation. (Credits for windows and skylights are capped at $200.)
- 10 percent of the cost of metal and asphalt roofs specially designed to keep builders cooler, not including installation.
- $50 for a furnace fan called a main air circulating fan.
- $150 for a natural gas, propane or oil furnace or hot water boiler with an annual fuel utilization efficiency rate (AFUE) of 95 percent or greater.
- $300 for an electric heat pump water heater with an energy factor of at least 2.0.
- $300 for a highly efficient electric heat pump.
- $300 for a highly efficient central air conditioner.
- $300 for a natural gas, propane or oil water heater with an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent.
- $300 for a biomass stove.
More information on the home energy credits is available from the Alliance to Save Energy at www.ase.org/taxcredits
While I did not see anything addressing improvements made when selling your home, I would think they would still apply. However, we do not give tax advice, so please check with a tax professional if you have questions.