Did you decide to Go Green in 2011? If you made energy savings improvements to your primary residence during the 2011 tax year, you may be eligible to take advantage of tax credits. These credits are designed to help homeowners recover some or all, of the purchase price of these improvements. In some cases, these credits will also cover professional installation costs in addition to the price of the actual hardware or items themselves.
Does my 2011 Home Improvement Qualify for a Tax Credit?
Not all energy savings improvements will qualify for a 2011 tax credit. And, the full amount of the improvement may not be deductible. To determine eligibility, start by reviewing your list of 2011 home improvements to see which ones apply to your home. Below is a list of the most commonly deductible energy improvements:
- Storm Windows
- Storm Doors
- Skylights
- Central Air Conditioning Units
- Insulation
- Roofing- Asphalt Roofs
- Furnace
- Water Heaters
You could be eligible to receive up to 10% of the total cost of these improvements in the form of a tax credit. However, keep in mind that the lifetime maximum for taking advantage of such a credit is currently set at $500 in total for 2011, $200 of which can be attributed to the addition of energy efficient windows.
Some improvements qualify for as much as a 30% credit, without an upper limit, through 2016. These items include geothermal heat pumps, solar energy systems, wind energy systems and fuel cells. While these items are less commonly installed in residential properties, it is critical to check if they apply to your 2011 home improvements.
A detailed description of the energy credits available are outlined in Part 2 of the IRS Form 5695, noted as the “Residential Energy Efficient Property Credit”.
Ray is an ex-financial adviser and the founder of Financial Highway. Currently working in the financial industry and working towards completing his Chartered Financial Analyst, CFA, designation.