Energy Efficiency Home Improvement Tax Credit
Beginning in January 2023, many energy-efficient improvements for homes may qualify for tax credits up to $3,200. These improvements include building envelope components (exterior doors, windows, skylights, insulation and air sealing materials or systems), residential energy property (central air conditioners, natural gas, propane or oil water heaters, and hot water boilers), heat pumps, biomass stoves and boilers. All new building envelope components and residential energy property must meet certain energy efficiency requirements to qualify for these credits.
If you are thinking about undergoing a renovation or addition project, this could be a great time to go ahead and replace old, leaky windows, select energy-star rated doors, or upgrade your central air conditioner!
These credits qualify for renovations and additions on existing primary residences in the United States. Credits can be claimed on your tax return by filing form 5695 the same year when the improvements are installed. Consult your tax professional for specifics.
For more information about maximum credits and qualified expensed, read more here:
https://www.irs.gov/credits-deductions/energy-efficient-home-improvement-credit
Residential Clean Energy Tax Credit
Investments in renewable energy for your home may also qualify for an annual residential clean energy tax credit. These investments include solar, wind, geothermal, fuel cells or battery storage technology. The credit equals 30% of the costs of new, qualified clean energy property installed for your home anytime from 2022 through 2023.
The credit applies to your main residence, whether an existing home or new construction. You may be able to claim this credit for improvements made to a second home that you live in part-time if you do not rent to others. Credits can be claimed each year when new clean energy property is installed. Clean energy property must meet certain efficiency standards to qualify. Labor costs for assembly, installation, wiring or piping to connect to the home may be included in qualified expenses. Credits can be claimed on your tax return by filing form 5695 the same year when the improvements are installed. Consult your tax professional for specifics.
For more information about qualified expenses and clean energy property standards, refer to:
https://www.irs.gov/credits-deductions/residential-clean-energy-credit
