Eco-Friendly Tax Breaks: Home Energy Improvements You Can Do
Eco-friendly home energy improvements are not only beneficial to the environment but can also save homeowners money in the long run. The good news is that the government offers tax breaks to homeowners who make energy-efficient home improvements.
This article will outline some home energy improvements that can qualify for tax credits and how to take advantage of these tax breaks.
What are Home Energy Improvements?
Home energy improvements refer to any changes to a home that reduce energy consumption. These improvements range from small changes, such as using energy-efficient light bulbs, to more significant changes, such as installing solar panels.
Home energy improvements can be made to any part of a home, including the roof, walls, windows, and doors.
Types of Home Energy Improvements that Qualify for Tax Credits
1. Solar Panels
Installing solar panels is one of the most significant energy-efficient upgrades a homeowner can make. These use sunlight to generate electricity for a home, which can significantly reduce energy bills.
Additionally, the government offers a tax credit of up to 26% of the total cost of installation. This tax credit is available until 2022, which will gradually decrease.
2. Windows and Doors
Windows and doors can be a significant source of energy loss in a home. Replacing old windows and doors with energy-efficient ones can significantly reduce energy consumption.
Homeowners can receive a tax credit of up to 10% of the cost of the purchase and installation of energy-efficient windows and doors. This tax credit applies only to the product’s price, not the structure.
Insulating a home is another energy-efficient upgrade that can significantly reduce energy bills. Insulation prevents heat from escaping a home during the winter and keeps heat out during the summer.
The government offers insulation installation cost tax credits. This tax credit applies only to the product’s price, not the installation.
4. Heating and Cooling Systems
Heating and cooling systems can be a significant source of energy consumption in a home. Upgrading to an energy-efficient heating and cooling system can significantly reduce energy bills.
Homeowners can receive a tax credit for purchasing and installing an energy-efficient heating and cooling system.
How to Take Advantage of Tax Credits for Home Energy Improvements
To take advantage of tax credits for home energy improvements, homeowners must file Form 5695 with their tax returns. This form calculates the amount of the tax credit a homeowner is eligible for based on the cost of the home energy improvement.
Homeowners should keep receipts and records of the cost of the home energy improvement to claim the tax credit.
Additionally, it is essential to note that not all home energy improvements qualify for tax credits. Homeowners should ensure that the home energy improvement they are considering is eligible for a tax credit before making any changes.
Home energy improvements are an excellent way for homeowners to reduce energy consumption and save money on energy bills. The government offers tax credits to incentivize homeowners to make energy-efficient home upgrades.
By taking advantage of these tax credits, homeowners can save money and help the environment simultaneously.
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