energy tax credit: which home improvements qualify?

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Energy Tax Credit: Which HomeImprovements Qualify?Updated for Tax Year 2019

Taxpayers who upgrade their homes to make use of renewable energy may be eligible for atax credit to offset some of the costs. Through the 2019 tax year, the federal governmentoffers the Nonbusiness Energy Property Credit. The renewable energy tax credits are goodthrough 2019 and then are reduced each year through the end of 2021. Claim the credits byfiling Form 5695 with your tax return.

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Energy Tax Credit: Which Home Improvements Qualify? - TurboTax Tax Tips & Videos https://turbotax.intuit.com/tax-tips/home-ownership/energy-tax-credit-which-home-impro...

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Residential Renewable Energy Tax Credit

Equipment that qualifies for the Residential Renewable Energy Tax Creditincludes solar, wind, geothermal and fuel-cell technology:

Solar panels (https://turbotax.intuit.com/tax-tips/going-green/federal-tax-credit-for-solar-energy/L7s9ZiB4D), or photovoltaics, for generatingelectricity. The electricity must be used in the home.Solar-powered water heaters. The water heated by the system must beused inside the home, and at least half of the home's water-heating capacitymust be solar. (Solar heaters for swimming pools and hot tubs do notqualify.)Wind turbines that generate up to 100 kilowatts of electricity for residentialuse.Geothermal heat pumps that meet federal Energy Star guidelines.Fuel cells that rely on a renewable resource (usually hydrogen) to generatepower for a home. The equipment must generate at least 0.5 kilowatts ofpower.

Renewable energy tax credit details

According to the U.S. Department of Energy, you can claim the ResidentialEnergy Efficiency Property Credit for solar, wind, and geothermal equipment inboth your principal residence and a second home (https://turbotax.intuit.com/tax-tips/going-green/what-are-energy-tax-credits/L4KbTmTZS). But fuel-cellequipment qualifies only if installed in your principal residence.

The credit is equal to 30% of the cost, including installation.There is no upper limit on the amount of the credit for solar, wind andgeothermal equipment (https://turbotax.intuit.com/tax-tips/going-green/are-energy-efficient-appliances-tax-deductible/L2e5oUsbe).The maximum tax credit for fuel cells is $500 for each half-kilowatt of powercapacity, or $1,000 for each kilowatt.

For example, a fuel cell with a 5 kW capacity would qualify for 5 x$1,000 = $5,000 tax credit.


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Nonbusiness Energy Property Tax Credit (Extended through December 31,2019)

Equipment and materials can qualify for the Nonbusiness Energy Property Creditonly if they meet the standards set by the Department of Energy. Themanufacturer can tell you whether a particular item meets those standards.

For this credit, the IRS distinguishes between two kinds of upgrades.

The first is "qualified energy efficiency improvements," and it includes:Home insulationExterior doorsExterior windows and skylightsCertain roofing materials

The second category is "residential energy property costs." It includes:Electric heat pumpsElectric heat pump water heatersCentral air conditioning systemsNatural gas, propane or oil water heatersStoves that use biomass fuelNatural gas, propane or oil furnacesNatural gas, propane or oil hot water boilersAdvanced circulating fans for natural gas, propane or oil furnaces

Details of the Nonbusiness Energy Property Credit (Extended throughDecember 31, 2019)

You can claim a tax credit for 10% of the cost of qualified energy efficiencyimprovements (https://turbotax.intuit.com/tax-tips/home-ownership/10-energy-related-home-improvements-you-can-make-today/L3jMns3nn) and 100% ofresidential energy property costs. This credit is worth a maximum of $500 for allyears combined, from 2006 to its expiration. Of that combined $500 limit,

A maximum of $200 can be for windows.The maximum tax credit for a furnace circulating fan is $50.The maximum credit for a furnace or boiler is $150.The maximum credit for any other single residential energy property cost is$300.


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energy tax credit: which home improvements qualify?

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