Generous tax credits resulting from energy-saving purchases are still available to taxpayers, even after the so-called fiscal cliff legislation passed earlier this year.
On the low end of the spectrum, homeowners can receive a tax credit equal to 10% of the cost to upgrade their windows, doors, and other energy efficient household items. On a grander scale, you can receive a credit for major purchases such as air conditioners, furnaces, biomass stoves, and special metal roofs. The maximum lifetime credit is generally $500, but some items are capped at a lower amount. For instance, windows are maxed out at $200 and furnaces at $150. Air conditioners limit out at $300.
Businesses can also get in the energy tax credit game. Some of the tax perks available include credits for constructing wind, biofuel, or ethanol facilities, as well special vehicle refueling stations and highly efficient appliances. The IRS’s qualifications for these big-ticket items are very specific, so you would be smart to consult a tax professional before launching such a project.
But large-scale energy upgrades aren’t limited to just businesses. Individuals can receive a credit of 30% of the cost to upgrade their home with a qualified geothermal heat pump, solar electricity generator, or wind harnessing device. Eligible costs can include labor and site preparation in addition to the equipment. What’s more, the credit for these types of projects is available for vacation homes too. And there is no lifetime limit, so the bigger project, the bigger the saving. Again, check all the rules to qualify.
Recordkeeping plays an important role in claiming these tax credits, so be sure to obtain all manufacturer certifications for the equipment you buy and keep all records of expenditures made.
David Compton is a Certified Public Accountant with offices in Meridian and Birmingham, Ala.