Tax Law (Questions About Taxes)/Energy tax credits

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Question
Abraham:
I installed a couple of insulated doors last year. Is there a tax credit for such energy saving improvements.

Answer
Dear Nicholas,

Thank you for this question, Energy credits questions are of great importance to many taxpayers.

Historical background:

For 2009 and 2010, different rules applied to the nonbusiness (residential) energy property credit. For those years, the amount of the credit was equal to 30 percent of amounts paid or incurred for qualified energy efficient improvements and 30 percent of the amount of residential energy property expenditures paid or incurred. The limitation on the total amount of the credit for amounts paid or incurred in those two years was $1,500.

Current status:

The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 extended the credit to 2011, modified the credit percentages, and modified the dollar limitation. The American Taxpayer Relief Act of 2012 further extended the credit through 2013.


Residential Energy Credits in General:

Taxpayers who make energy saving improvements to their homes may be eligible for one or both of the nonrefundable residential energy credits  and the residential energy efficient property credit. These credits are non refundable, which in tax language means if you have a tax liability it will be netted by these credits;however, these credits will not trigger a refund on their own.

Limitation:

There is a limitation of $500 on the total amount of nonbusiness energy property credit that may be claimed. This limitation is a lifetime limitation, not an annual limitation

Qualified Energy Efficient Improvements:

Qualified energy efficiency improvements include the following kinds of energy efficient building envelope components that are installed on or in a taxpayer's main home if the original use of the component begins with the taxpayer and the component reasonably can be expected to remain in use for at least five years:

(1) any insulation material or system that is specifically and primarily designed to reduce the heat loss or gain of a home when installed on or in the home;

(2) exterior windows and skylights;

(3) exterior doors; and

(4) any metal or asphalt roof with appropriate pigmented coatings or cooling granules that are specifically and primarily designed to reduce the heat gain of the home.

I hope this answered your question.


Regards,
Abraham Itani, CPA

P.S. please rare my answer.  

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ABRAHAM ITANI, CPA

Expertise

TAX QUESTIONS DOMESTIC AND INTERNATIONAL OUTBOUND AND INBOUND. FBAR COMPLIANCE. CORPORATE, PERSONAL, PARTNERSHIP, PASS TROUGH ENTITIES, S-CORPORATION, LLC, TRUST, GIFT TAX, 1120, 1040, LATE FILING, NON FILING, AMT, FTC.

Experience

MORE THAN 10 YEARS OF STATE AUDIT TAXATION, MORE THAN 10 YEARS OF PRIVATE AND PUBLIC TAX EXPERIENCE WITH ITANI ACCOUNTING AND TAX, KPMG AND MNP. DEALING WITH HIGH NET WEALTH INDIVIDUALS, LARGE PARTNERSHIPS, EXPAT., CFC AND PFIC. DEALING WITH TAXING AUTHORITY ON ISSUES OF NON FILINGS AND LATE FILINGS.

Organizations
MEMBER OF AICPA, AND NJSCPA.

Education/Credentials
CERTIFIED PUBLIC ACCOUNTANT IN NEW JERSEY AND COLORADO.

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