Date:2014-06-20 Tax credits for energy saving home improvements

One of the tax credits extended through Dec. 31, 2014 was the Residential Energy Credit.

This credit allows for a deduction for energy saving improvements made to your home located in the United States. A home is where you lived in 2014 and can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards.

When taking the credit the basis for your home must be reduced by the amount of the credit. The costs incurred is taken when the original installation of the energy item is completed. You may be able to take a credit of 30 percent of your costs of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property. Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home. The credit amount for costs paid for qualified fuel cell property is limited to $500 for each one-half kilowatt of capacity of the property.

Non-business Energy Property Credits include 10 percent of the amount paid or incurred for qualified energy efficiency improvements installed during 2014, and any residential energy property costs paid or incurred in 2014.

However, this credit is limited as follows:

• A total combined credit limit of $500 for all tax years after 2005.

• A combined credit limit of $200 for windows for all tax years after 2005.

• A credit limit for residential energy property costs for 2014 of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property.

It is important to know that if the total of any non-business energy property credits you have taken in previous years (after 2005) is more than $500, you generally cannot take the credit in 2014.

Qualified energy efficiency improvements

Qualified energy efficiency improvements are building envelope components installed on or in your main home that you owned during 2014. To take the credit the original use of the component begins with you and the component can be expected to remain in use at least five years. The component must meet certain energy standards.

• Any insulation material or system that is specifically and primarily designed to reduce heat loss or gain of a home when installed in or on such a home.

• Exterior windows and skylights.

• Exterior doors.

• Any metal roof with appropriate pigmented coatings or asphalt roof with appropriate cooling granules that are specifically and primarily designed to reduce the heat gain of your home.

Qualified residential energy property is any of the following. Certain electric heat pump water heaters; electric heat pumps; central air conditioners; natural gas, propane, or oil water heaters; and stoves that use biomass fuel. Qualified natural gas, propane, or oil furnaces and qualified natural gas, propane, or oil hot water boilers. Certain advanced main air circulating fans used in natural gas, propane, or oil furnaces.

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