The US government has allowed homeowners to use the home improvement tax credit for certain upgrades to their homes. This is a great way to cut down on the total amount of taxes you may owe to the federal government. It is also a good way to increase your tax refund (if any). Where home renovations and development are concerned, most of the tax credits are given to encourage energy efficiency among homeowners and developers. This means you should follow through on the regulations (where feasible) for such credits; continue reading this article to learn how to accomplish this.
Wind Turbines and Geothermal Heat Pumps
First of all, you can check your eligibility for a home improvement tax credit by visiting this website to see what items merit tax credits for the relevant year. Note that there are some items that are eligible for a certain year only while there are others that are eligible for credits over several years. For example, 30% of cost tax credits exist until December 31, 2016 for principal residences and second homes regarding small wind turbines with a nameplate capacity that does not exceed 100 kilowatts. Geothermal heat pumps that fall within certain EER and COP requirements are also eligible for this 30% of cost tax credit.
Solar Energy Systems and Fuel Cells
Solar energy systems, with at least half of total generated energy coming from the sun itself and with certification from the SRCC, qualify for the 30% of cost tax credits that expire in 2016. These systems consist of solar water heaters and solar panels (photovoltaic systems) which convert light energy from the sun into electricity. Fuel cells with at least 30% efficiency and minimum capacity of 0.5 kW also qualify for the 30% of cost tax credit with a limit of $500 for each 0.5 kilowatt of power capacity.
How to Claim a Credit
Once work is completed and you submit payment, ask your contractor or the person/company you paid to separate labor expense from material and supply cost. Typically, you can only claim materials and supplies as taxable expense. Once the calendar year ends and you file your taxes, enter the amount of your taxable expenses for the appropriate home improvement tax credit. Now keep in mind that a tax deduction decreases your taxable income while a tax credit reduces the amount of tax you owe (or increases your tax refund).
There are additional tax deductions and/or credits you could receive. The key is to check the government sites and consult with an accountant or tax professional. For instance, home upgrades or improvements for medical reasons such as for wheelchairs and other physical ailments could qualify. Thus, receiving a certain home improvement tax credit or deduction is actually straightforward. Nonetheless, make sure you stay inform of events that occur in Congress throughout the year. Also, visit the government energy star site above to stay inform. You definitely owe it to yourself to take advantage of the appropriate home improvement tax credit whenever feasible.