The 2011 Energy Saving Home Improvement Tax Credit

The tax credit for energy saving home improvements has undergone a change from previous years. In 2010, for example, you could achieve a credit for as much as 30% of the cost of your energy-saving home improvements, with a ceiling of $1,500.

Beginning January 1, 2011, the credit rate is now just 10%, and the ceiling has been lowered to $500. Something important to keep in mind about this credit: any credit claimed in prior years (2009 and/or 2010) will be used to reduce your ceiling. In other words, if you claimed the full credit (or any amount up to $500) on a previous year’s tax return, you have no energy-saving home improvement credit available to you.

In addition to the changes above, there are specific item caps in place as well. For example, if you are putting in a new furnace or water heater, the credit for those units is capped at $150. If you’re putting in a biomass fuel stove (those are the corn-fueled or pellet-fueled furnaces), then you can claim up to a $300 credit against the purchase price. And if you’re putting in new energy-efficient windows, the cap is $200.

One area that the credit remains at 30% is with alternative energy systems, such as wind-power or solar panels, so if you’re really into the alternative energy option this could be helpful.

About the author

Jim Blankenship, CFP®, EA

Jim Blankenship is the founder and principal of Blankenship Financial Planning, Ltd., a financial planning firm providing hourly, as-needed financial planning and advice. A financial services professional for over 25 years, Jim is a CFP professional and has earned the Enrolled Agent designation, a designation that qualifies him as enrolled to practice before the IRS. Jim is also a NAPFA-registered financial advisor, which designates him as a Fee-Only Financial Advisor.

An IRA Owner's Manual
A Social Security Owner's Manual

12 Comments

Leave a comment
  • Jim:

    I spent $6,000.00 on a triple pane high efficiency windows. One was a 1/4 1/2 1/4 picture window that was actually three windows in one casing and the other was a traditional double hung window.

    Does this qualify for a $200.00 credit, a $400.00 credit or the full $500.00 credit

  • I live in PEI, I received about $1200 from the 2009 tax credit. We renovated our basement during 2010, can I use those receipts to receive any more tax credit?
    thanks

  • Marilyn –

    For 2011, the limit is reduced to $500 credit, and it is based upon 10% of the cost of your improvements. So in order to get the full $500 credit for energy-efficient improvements you would need to expend $5,000 or more (which isn’t hard to do, these days).

    The $500 limit is reduced by any prior years’ credit you may have taken.

    See the IRS Form 5695 instructions for more details – http://www.irs.gov/pub/irs-pdf/f5695.pdf

  • We are starting to renovate our basement this Spring, including insulating, new windows, HRV etc. Is there any rebates we can still qualify for? Thanks in advance!

  • Mariama – the expenditures must be claimed in the year that you incurred them. You can amend your return for 2007 up to April 15, 2011. If the siding meets the qualifications (and it’s complicated, you’ll have to look at IRS Notice 2006-26 to clarify, and the installation date is critical as well), then you may be eligible for up to a 10% credit, up to a maximum of $500 on the cost.

    The 2009 return could be amended up to April 15, 2013, so you’ve got some time to work on that one. This credit could be 30% of the cost of the unit, up to a $1,500 limit, minus any credit you might have received in previous years.

    Hope this helps –

    jb

  • We put siding on our house in 2007 and got a new hot water heater in 2009. Can we still claim the energy credits on our 2010 return, is we never claimed it before?

  • Hello, Hope –

    There is an aggregate $1,500 credit available – so if you used it all in 2009, you have no credit remaining for 2010.

    jb

  • If we claimed a house imporvement in ’09 and reached the $1500.00 limit w/ that claim, is there an additional $1500 available for a ’10 house improvement? Or is the total for ’09 and ’10 $1500 together; once used in ’09 there is nothing available for ’10 taxes? Thanks.

  • Helen –

    Yes, the siding and wrap should qualify for the 30% credit, as long as the manufacturer certifies the improvements as qualifying for the credit. In addition, the credit is limited to $1,500 for 2009 and 2010 together, so any other credits taken for energy efficient improvements could reduce the maximum from $1,500.

    Hope this helps –

    jb

  • We put on house wrap and insulated vinyl siding in 2010. We put it over our old 31 year old wood siding. Does any of this count for tax credit. Thanks

Leave a Reply

Your email address will not be published.

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>

Copyright 2014 FiGuide.com   About Us   Contact Us   Our Advisors       Login