Individuals living in the United States and owning a home used as their principal residence are eligible for a nonrefundable tax credit up to $500 for certain residential energy improvements made to their home.
What energy-efficient home improvements are eligible? The overall $500 cap can be reached in several ways with the purchase and installation of energy-efficient products that meet certain efficiency criteria:
- Exterior Windows: Includes skylights and storm windows.
- Insulation, exterior doors or roofs: Includes seals to limit air infiltration, such as caulk, weather stripping and foam sealants, as well as storm doors.
- Central air conditioner, heat pump, furnace, boiler, water heater or biomass stove. A separate credit applies for geothermal heat pump systems.
How much is the credit? The tax credit is now 10% of the cost of building envelope improvements, excluding labor costs and limited to $200 for windows, and specific dollar limits for heating and cooling equipment. There is a cap on the credit amount of $500 for years 2006 through 2011 combined. If you have ever claimed this credit in the past, it counts against the $500 limit.
What do I need to do to get the credit? You will need to file IRS Form 5695 with your taxes. In addition, you will need to keep at least receipts proving that you purchased the improvements and a copy of the manufacturer’s certification. Manufacturers can certify (in packaging or on the company’s website) which of their products qualify for the tax credit. Retailers, contractors and manufacturers should be able to help you determine what levels of insulation and what other products qualify.