2011 Energy Tax Credits: What You Need to Know to Collect

By
Real Estate Broker with Kathleen Cooper, Best Option-EXIT Realty Partners, REALTOR® 9084437/Brokers

Taxes are the talk of the season & energy saving tax credits have been the talk of the year! They're not as much as they used to be, but there are still energy tax credits to be had for upgrades made in 2011.

 

Other limits on IRS energy tax credits besides $500 max

  • Credit only extends to 10% of the cost (not the 30% of yesteryear), so you have to spend $5,000 to get $500.
  • $500 is a lifetime limit. If you pocketed $500 or more in 2009 and 2010 combined, you’re not entitled to any more money for energy-efficient improvements in the above seven categories. But if you took $300 in the last two years, for example, you can get up to $200 in 2011.
  • With some systems, your cap is even lower than $500.
  • $500 is the max for all qualified improvements combined.

Certain systems capped below $500

No matter how much you spend on some approved items, you’ll never get the $500 credit--though you could combine some of these:

System Cap
New windows $200 max (and no, not per window—overall)
Advanced main air-circulating fan $50 max
Qualified natural gas, propane, or oil furnace or hot water boiler $150 max
Approved electric and geothermal heat pumps; central air-conditioning systems; and natural gas, propane, or oil water heaters $300 max

And not all products are created equal in the feds' eyes. Improvements have to meet IRS energy-efficiency standards to qualify for the tax credit. In the case of boilers and furnaces, they have to meet the 95 AFUE standard. EnergyStar.gov has the details.

Tax credits cover installation—sometimes

Rule of thumb: If installation is either particularly difficult or critical to safe functioning, the credit will cover labor. Otherwise, not. (Yes, you’d have to be pretty handy to install your own windows and roof, but the feds put these squarely in the “not covered” category.)

Installation covered for:

  • Biomass stoves
  • HVAC
  • Non-solar water heaters

Installation not covered for:

  • Insulation
  • Roofs
  • Windows, doors, and skylights

How to claim the 2011 energy tax credit

  • Determine if the system you installed is eligible for the credits. Go to Energy Star's websitefor detailed descriptions of what’s covered; then talk to your vendor.
  • Save system receipts and manufacturer certifications. You’ll need them if the IRS asks for proof.
  • File IRS Form 5695 with the rest of your tax forms in 2012.

This article provides general information about tax laws and consequences, but isn’t intended to be relied upon as tax or legal advice applicable to particular transactions or circumstances. Consult a tax professional for such advice, and remember that tax laws may vary by jurisdiction.

Visit houselogic.com for more articles like this.

Copyright 2012 NATIONAL ASSOCIATION OF REALTORS®

 

 

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  1. Kevin Guttman 02/03/2012 01:18 PM
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Rainer
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Kevin Guttman
Residential Mortgage-Lending Virtually Nationwide
Top Mortgage Originator

Thanks Kathleen, great info. I wasn't aware these credits have gone down.

February 03, 2012 01:16 PM
Rainmaker
573,579
Wayne and Jean Marie Zuhl
The Last Names You'll Ever Need in Real Estate
Hallmark Realtors

Great info - thank you so much for sharing! Every homeowner should read your post so I'm suggesting it.

February 03, 2012 01:22 PM
Rainmaker
353,712
Kathleen Cooper
EXIT Realty Partners - Broker, REALTOR®
Kathleen Cooper, Best Option-EXIT Realty Partners, REALTOR®

Thanks for stopping by and commenting Kevin, Wayne & Jean!  It is definitely the time of year to be paying attention to these things.  

Have a great weekend!

Sincerely,

Kath

February 03, 2012 03:21 PM
Rainmaker
1,575,750
Lou Ludwig
CRB, CRS, CIPS, GRI, SRES, TRC, e-PRO
Ludwig & Associates

Kathleen

Thanks for sharing the information on the 2011 energy tax credits.

Good luck and success.

Lou Ludwig

February 03, 2012 08:57 PM
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