You should consider installing a solar-powered water heater or other type of renewable energy equipment in order to benefit from a new tax credit. If you installed one last years, you may already qualify for your 2017 taxes!
Everyone is looking for new tax breaks each year in order to pay Uncle Sam a little less than the year before. In order to do this, it is important to take advantage of as many tax credits as you can find. Tax breaks come and go often, so it is wise to act fast and utilize these tax breaks before they disappear. Right now, taxpayers who make energy efficient upgrades or make use of renewable energy, may qualify for specific tax reliefs. Continue reading to learn about this tax benefit, how to use it, and some options to qualify in the years to come.
Energy Efficiency Tax Benefits
A fairly new federal tax benefit, called the Residential Energy Property Credit, allows property owners a tax credit of up to five hundred dollars (or 30% of the cost, including installation) for a wide range of home improvements that focus on residential energy efficiency. According to the U.S. Department of Energy, the Residential Energy Efficiency Property Credit can be claimed for solar, wind, and geothermal equipment upgrades.
Such home improvements and renovations include everything from solar paneling projects and water heaters, to new window installations, attic insulation, and much more. One interesting note is that this tax break was higher in earlier years, however, if a person has not yet claimed residential energy property credits in the years before, they can still claim them when filing this year. In order to claim this credit, you must file a Form 5695 with your tax return.
This residential energy property tax break is further rewarding because, in general, energy efficiency improvements are helpful and save money on their own. The tax break is an additional incentive. Be sure to take advantage of this tax benefit before it expires at the end of 2018. As mentioned before, tax benefits such as these come and go often. It is more than likely to see a similar tax break for 2018, however, the cap on return may be lower or higher. We cannot know until then!
Energy Efficient Upgrades to Consider for Tax Credit Qualification:
☑ Solar-Powered Water Heaters
☑ Solar Panels or Photovoltaics
☑ Wind Turbines
☑ Geothermal Heat Pumps
☑ Fuel Cell Power Generators
NOTE: There is another tax benefit that is similar to the residential energy property tax break called the “Nonbusiness Energy Property Credit.” Equipment and materials only qualify for the Nonbusiness Energy Property Credit if they meet all technical efficiency standards set by the Department of Energy. You can claim 10% of the cost. Talk to your accountant for more information.