Federal Tax Credits for Energy Efficiency Extended Through 2011by Parameters Construction on 02/28/11
The good news: Federal tax credits for have been extended through 2011.
The bad news: (OK, it's not really bad), but the tax credits for 2011 are at a lower rate than in 2010. The credits are also subject to a new "Lifetime Limitation" (total cumulative credits within category) that a homeowner can claim from January 1, 2006 to December 31, 2011. This means that if you've previously taken advantage of the Energy Tax Credit, whatever you claimed in the past counts against the reduced 2011 maximums. Be sure to check with your tax advisor regarding your specific situation.
For new items installed between January 1, and December 31, 2011, you may be eligible to receive tax credits as follows:
Energy Star window: up to $200
Water heater (includes electric, natural gas, propane, or oil): up to $300
Air conditioner: up to $300
Insulation, doors, and roof: up to $500
Furnace tax credit (includes natural gas, propane, oil, or hot water): $150 maximum. Efficiency must be 95% (up from 90% before the extension)
To qualify for the tax credit, items must:
Meet the Energy Star criteria in your region
Be used to improve an existing home. (Tax credit does not apply to new homes)
Be "placed in service" between January 1, 2011 and December 31, 2011. Placed in service is defined as when the property is ready and available for use.
Be installed in the taxpayer's primary residence
How to receive your tax credit:
Step 1: Purchase qualifying items. Look for the NFRC label on your product and make sure the ratings comply with the Energy Star requirements for your region.
Step 2: Keep the receipts that show the cost of the qualifying products, excluding installation charges. Save the NFRC label from each item as well as your manufacturer's certificate statement in case of an audit.
Step 3: Consult your tax advisor. The extension of the tax credit for energy efficient items has a few new rules that may restrict eligibility depending on previous tax credits claimed for windows and doors.
Step 4: Submit the claim with your taxes for the year the windows and/or doors were installed.
You can also visit the Energy Star website for more information.