Overview on Energy Efficient Home Credit

Energy Efficient Home CreditIn 2005, the Energy Policy Act was introduced. This act established the tax credit for making energy improvements to the existing properties. Initially, the act was applicable to the homes purchased in 2006 and 2007, with an aggregate cap of $500. In 2008 with some minor adjustments, the Energy Improvement and Extension Act reinstated the credit for 2009 purchases. In 2009, the American Recovery and Reinvestment Act further extended the credit to include improvements made in 2010. Here the earlier cap of $500 was replaced with a cap of $1,500 for improvements made in 2009 and 2010. In 2010, this energy efficient home credit policy was again renewed for improvements made in 2011. This change brought the credit to its original form. The original cap of $500 was also resumed. In 2012, again some changes were made but this time the credit was not available for the property’s purchased in 2012. However, when the American Taxpayer Relief Act of 2012 was renewed, this tax credit came into being.

This green building tax credit is made with the aim of improving the energy efficiency in the existing homes. Further, this credit act encourages the purchase of energy efficient heating, cooling and water heating equipment. According to this credit act, if a tax payer claims $500 or more of these tax credits in any previous years then any purchases made in 2011, 2012 0r 2013 will not be entitled for a green building tax credit. So, it is advisable to make claims in emergency only.

For making improvements in the home in order to avail energy efficient home credit, the owner can buy insulation material and does system design to reduce the heat loss or gain. Furthermore, for making changes in windows or exterior doors, the tax payer can only avail $200 in total. Exceeding beyond the limit is not refunded. Additionally, the pigmented metal roofing is allowed so that heat gain can be reduced and home can be protected. If you want to purchase energy efficient equipment then make sure you buy only the authenticated ones. These equipments are covered under the energy efficient home credit. The credit fully covers the product but with caps which varies product-wise. For example, an advanced main air circulating fan with a cap of $50, an electric heat pump water heater with a cap of $300, and a central air conditioner with a cap of $300.

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