There are two different tax credits offered for homeowners who make energy efficient improvements. Credits directly reduce the tax owed and will, therefore, save money. This article offers energy tax credit tips for MA home owners.

Two Different Tax Credits

The Wind, Solar, Geothermal and Fuel Cell Tax Credit

This tax credit is good for pre-existing homes and new construction, if used as principal residences. The credit is not valid for investment properties. Homeowners may receive a credit totaling 30 percent of the cost of improvements completed between January 1, 2011 and December 31, 2011.

The items below qualify for the tax credit

  • Geothermal Heat Pumps
  • Solar Panels
  • Solar Water Heaters
  • Small Wind Energy Systems
  • Fuel Cells (up to $500 for each 0.5 kilowatt capacity; other terms apply)

Energy Efficiency Upgrades

This credit covers building components, insulation, windows, skylights, doors, roofs, air circulating fans, furnaces, and hot water boilers. There are certain requirements for each item, so refer to the tax guidelines prior to taking the credit. There are price restrictions on certain items such as windows. Only work completed on principle residences may be used and all products must have at least a 5 year lifespan. In general, homeowners can take a credit of ten percent of the purchase price up to five hundred dollars. Once the five hundred dollars is reached, no additional amount may be applied in any future year. This is a lifetime limit and not an annual one.

Energy Tax Credit Tips For MA Home Owners

With all tax items, keep receipts to confirm expenditures. Also document the manufacturer and model number of all items as some have specific requirements under the tax laws. If you are uncertain of whether your upgrades qualify for this credit or have a large number of credits in your tax return, consider hiring a tax professional. Comprehensive energy tax credit tips for MA home owners is provided at the Energy Star website. The details in this article was compiled by Peter DaMore at Law Offices of Peter T. DaMore Jr. as is meant only as an introduction.