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How to Claim Tax Credits for Your 2011 Energy-Efficient Home Upgrades

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Date: Mar 01, 2012

How to Claim Tax Credits for Your 2011 Energy-Efficient Home Upgrades

You’re already reaping the benefits of lower utility bills on the energy-efficient home improvements you made in 2011. Now it’s time to claim them on your 2011 income tax return. Find out what energy-efficient home improvements are eligible for federal tax credits, and which forms you’ll need to claim them.

Energy Efficiency Tax Credits: Claim Up to $500 in Home Improvements

Did you know you can get up to $500 back on your 2011 income tax return if you installed energy-efficient products in your home last year? You can do it through the Residential Energy Credits’ “nonbusiness energy property credit,” which gives back 10% of how much you spent on building envelope improvements. This 10% payback has a $500 cap, with dollar limits for specific equipment.

While you can claim the full $500 credit from improvements you made in 2011, the credit is actually cumulative, including any credits claimed since 2006. Check our top tax credits resource for details.

What Counts Toward the Nonbusiness Energy Property Credit?

If you meet certain criteria like owning your home, and if you used eligible products to make that home more energy efficient, you may be eligible for the nonbusiness energy property tax credit.  Eligible products include certain energy-efficient:

  • Insulation
  • Roofs made of metal or asphalt
  • Exterior doors
  • Exterior windows , including skylights and storm windows
  • HVAC and water heating systems, including central A/C, water heaters, heat pumps, furnaces and boilers

Most of these energy-efficient products reduce the heat loss or gain of your home, or heat/cool your home without using as much energy. To ensure that your product is eligible, check the manufacturer’s certification statement, which can sometimes be found in the packaging and is likely on the manufacturers’ website.

Tax Time: What Forms You Need to Claim Your Credit

To claim the nonbusiness energy property credit:

  • For your records, keep your receipts and manufacturer’s certifications from the energy-efficient products that you installed. You don’t have to submit copies with your tax return, but you will need them if you are audited.
  • Download IRS Form 5695 and fill it out.
  • Take your total number of credits at the bottom of Form 5695, and enter it into line 52 of Form 1040.
  • Attach Form 5695 to Form 1040.
  • Submit these forms with your 2011 taxes by April 15, 2012.

Questions on the Nonbusiness Energy Property Credit?

If you have questions on how to claim your energy-efficient home upgrades, read more about Form 5695 and pay special attention to the well-written “General Instructions” on the final pages of the PDF.  If you still need help, consult a tax professional (and remember that we at the Alliance to Save Energy are experts on energy efficiency – not taxes).

Other Tax Credits for Saving Energy at Home

The Residential Energy Credits also include an incentive for geothermal heat pumps. This credit, called the “residential energy efficient property” credit, provides 30% of the cost of these systems, as well as   renewable equipment like solar water heaters and small wind systems.

More Info on Energy Efficiency Tax Credits