With tax time fast approaching, many people are hoping for a possible tax credit to minimize the amount of money they will owe the IRS. Thankfully, through the reinstatement of the 25C tax credit, homeowners have the ability to write off a portion of their home improvement costs. The following are some examples of home improvements eligible for a tax credit.
Any homeowner who installed a new qualifying HVAC unit or retrofit improvements to an old one can claim up to 10 percent of the installed cost up to $500.
What HVAC units qualify?
The following information is from the Air Conditioning Contractors of America:
“For a unit to qualify for a tax credit, it must meet a few requirements. A split system central air conditioner must meet or exceed 16 SEER, or Seasonal Energy Efficiency Ratio, and 13 EER, or Energy Efficiency Ratio. Package system central air conditioners must meet or exceed 14 SEER and 12 EER. To qualify for a tax credit, an air source heat pump must meet or exceed 15 SEER, 12.5 EER and 8.5 HSPF, or Heating Season Performance Factor. Package heat pump units must meet or exceed 14 SEER, 12 SEER and 8 HSPF.”
New Exterior Windows, Skylights and Doors
The tax credit for these improvements maxes out at $500, and installation and labor costs cannot be claimed. In order to qualify for the tax credit, both the U-factor and the Solar Heat Gain Coefficient, or SHGC, must be less than or equal to 0.30. These qualifications are valid for all installations after June 1, 2009. If a homeowner is unsure if their new windows, doors or skylight qualifies for the tax credit, simply ask the installer.
Only the insulation itself qualifies for the tax credit, and the insulation material must meet 2009 IECC, or the International Energy Conservation Code, criteria to qualify.
Non-Solar Water Heaters
The tax credit for non-solar water heaters includes up to 10 percent of its cost including labor and installation with a maximum tax credit of $500. Tankless gas, propane and oil water heaters qualify for this tax credit if they have an energy factor of 0.82 or greater and a thermal efficiency of 90 percent or higher. Unfortunately, electric water heaters do not qualify for the tax credit. However, electric heat pump water heaters do qualify if they have an energy factor greater than 2.0.
Improvements That Use Other Forms of Power
There is a one-time tax credit of 30 percent on the installation of qualifying solar water heaters, solar panels, geothermal heat pumps, fuel cells or small wind turbines. If homeowners are considering getting off the grid, now is the time. The 30 percent tax credit includes the cost of the item, installation and labor. Moreover, barring fuel cells, there is no maximum limit on the amount claimed.
If a homeowner has accomplished any of the above home improvements, they should consider the possibility of a much-deserved tax credit. If they are unsure about whether their home improvement qualifies, the professional who completed the work or sold them the item will likely be able to share this information.