Is your home adequately protected from the winter elements? If you haven’t done so already, consider installing energy-saving improvements in your home before the end of the year. Besides the positive impact on the environment, as well as your personal comfort, you may qualify for one or two types of residential energy credits.
Both credits have expired numerous times in the past, only to be temporarily revived by Congress. For instance, in the latest development, the credits were reinstated by the Protecting Americans from Tax Hikes Act, retroactive to 2015, and extended through the end of 2016. But the credits will expire again on Dec. 31 unless Congress takes further action.
Here’s a brief rundown on the two credits.
1. Regular residential energy credit. You can generally claim a credit equal to 10 percent of the cost of qualified energy-saving expenses made in your principal residence only. (Vacation homes aren’t eligible.) But there’s a lifetime limit of $500 for this credit and a separate dollar limit on certain types of expenses.
The list of eligible expenses includes the following:
- Advanced main air circulating fans
- Air source heat pumps
- Biomass stoves
- Central air conditioning
- Gas, propane, or oil hot water boilers
- Water heaters (nonsolar)
- Windows, doors, and skylights
Note that the allowable credit for windows is capped at $200; furnaces and boilers at $150; air conditioners, air source heat pumps, and biomass stoves at $300; and advanced main air circulating fans at $50. What’s more, credits claimed in prior years reduces the maximum $500 lifetime credit. Factor this into the equation.