Making certain home improvements can lighten next year’s tax bill.
2015 will soon be coming to a close, but it may not be too late to take advantage of a number of tax deductions for making certain home improvements that improve the energy efficiency of your home. If you make improvements or purchase energy efficient items for your home during the calendar year 2015, you may be eligible to deduct part of the cost on your 2015 tax returns.
Federal Energy Credit Options
There are two main federal energy tax credits homeowners can take advantage of this year. The Non-business Energy Property Credit gives 10% credit for the purchase of certain energy efficient appliances, heating/cooling systems, and other home improvements. Replacement windows, storm doors, skylights and insulation as well as some roofs can qualify for this credit of up to $500 total. There are limits on how much of the credit can be applied to different items, such as $200 to windows. This credit is scheduled to be phased out for 2016, but has been extended each year since it was originally scheduled to expire in 2013.
The Residential Energy Efficient Property Credit gives back 30% of the cost of alternative energy equipment installed on your property. Some of the equipment that qualifies includes solar hot water heaters, solar panels for electric, wind turbines, and fuel cells. There is no dollar limit on the amount of the credit, and you can carry forward the unused portion of the credit on your 2016 tax return if the credit is more than the amount of tax you owe. This credit is scheduled to expire at the end of 2016, so if you can’t use it this year, you can plan to use it next year.
Tax credits can make home improvements more affordable for homeowners by reducing their effective cost. Solar equipment, in particular, becomes a good investment for homeowners because of the tax credits available.
Solar panels and other energy efficiency equipment can be made more affordable with tax credits.
State Tax Credits Add Savings
In addition to federal tax credits, many states also give tax credits to homeowners for purchasing energy efficient appliances and other items. Massachusetts has a program called MassSave that gives tax rebates and incentives as well as free energy assessments to homeowners and some businesses.
Some of the items listed for incentives are power strips, air purifiers, clothes dryers, and light fixtures. Heating and cooling equipment is also listed, as well as insulation and wireless thermostats. There are a few credits available for new construction of homes if they meet energy efficiency requirements. There are over 30 residential credits listed on the Mass Save website.
Tax incentives and credits are a viable way to make home renovations more affordable, and homeowners have just a few more weeks to take advantage of them this year. Moonworks offers energy assessments, window replacement and solar roofing, and participates in the MassSave program. Call us at 1-800-975-6666 for a free estimate.