Do you want tax credits this season? Have you upgraded your home with energy saving appliances? Well, the good news, you can use some of the cost of those upgrades as a tax write off. As of 2018, the federal government offered the Nonbusiness Energy Property Tax Credit, filed on form 5695. As a result, it allows you to use some of the costs as a tax credit.
Here is a list of what qualifies
- Solar panels used for your home
- Solar-powered water heaters
- Wind turbines that generate up to 100 kilowatts of electricity for residential use
- Geothermal heat pumps that meet federal Energy Star guidelines
- Fuel cells that rely on a renewable resources (such as hydrogen) and generate at least 0.5 kilowatts of energy
So how does the credit work? So long as the upgrades are on your principle residence or your second home (in the case of the fuel-cell it must be your principle residence), you can claim 30% percent of the cost, including installation. While there is no upper limit for the upgrades, the credit for fuel-cells is capped at $500 for each half-kilowatt of power capacity, or $1000 for each kilowatt.
One thing to remember is that while you can reduce your tax responsibility with energy upgrades, you can’t get money back. For example, if you owe $2,500, and have a credit of $3,000, you can only claim $2,500. However, for wind turbines and heat pumps, you can carry the credit over to the next year.
For more information on local, state, and federal utility-based incentives and policies for renewable energy and energy efficiency, visit the Database of State Incentives for Renewables & Efficiency (DSIRE).
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