Home Energy Tax Credits: An Opportunity to Save Big


Homeowners are entitled to receive a tax credit on several home improvement purchases that relate to energy efficiency and alternate energy equipment. These tax credits apply to not only the home improvement items purchased in 2016, but also extends to the investments made last year. It is, however, important to mention that, this year, the US government has revised multiple tax credits related to residential energy efficiency upgrades. To help you get the maximum benefit from the provision, we take a look at some of the facts related to home energy credits, highlighting energy efficiency and alternate energy equipment credits.

Credit on Energy Efficiency Improvements

Applicants are eligible to claim the “nonbusiness energy property tax credit” for any modifications or upgrades made to a property that they use as their primary residence, which increases its energy efficiency. The qualified items include but are not limited to energy efficient windows, doors, roofs, and insulation. Homeowners can claim up to 10 percent of the credit of the total cost of the energy saving items installed in their property. This credit has a maximum lifetime limit of $500, out of which applicants may use $200 for windows.

Credit on Alternate Energy Equipment

Under the alternate energy equipment credit provision, applicants can claim up to 30 percent of the cost of the renewable energy equipment installed in a residential property that doesn’t necessarily have to be their primary home. The qualified items include solar electric equipment, solar water heaters, wind turbines, and fuel cell property. If applicants have more credit than the amount of tax they owe to the US government, they can transfer the remaining credit and use it when filing their tax return the next year.

How to Claim?

To claim home energy tax credits, applicants need a written certification from the manufacturer of the items installed, which must clearly state that the purchased items qualify for nonbusiness energy property credit. In most cases, this statement is mentioned on the product’s packaging. Some manufacturers, however, also declare such certifications on their website. You can rely on both when it comes to claiming credit.

Note: Applicants who did not use their entire nonbusiness energy property credit in the past years can claim the credit on their 2015 tax return, which is available until 31st Dec, 2016.


Both the types of home energy credits discussed in this post are available through 2016. To claim, applicants are required to use Form 5695 available on the IRS website. If you need more information on what all purchases qualify for home energy tax credits, feel free to connect with us for a round of expert consultation. Equipped with extensive experience, the tax lawyers at the Law Office of Nick Nemeth, can also help you file a claim. You can reach us at (888) 660-1453 or fill out this contact form and we will take it from there.

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