Can You Get an Energy Credit if You Rent Your Home?
The federal government offers a variety of tax credits to homeowners who make energy-saving improvements and purchases. However, home renters are ineligible for these benefits, as are many owners of rental properties. While the incentives were reauthorized by the 2010 Tax Relief, Unemployment Insurance and Job Creation Act, there are new restrictions on the total amount available to individual claimants.
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Rental Exception
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Residential energy credits are generally limited to a property owner's primary residence. In addition, certain incentives apply to existing structures but not to new construction. Rental homes are automatically disqualified, except for second homes rented only part-time. The owner of such a property might qualify for a tax credit of up to 30 percent of the cost of geothermal heat pumps, solar panels, solar water heaters or small wind energy systems, as long as he lives in the house during some part of the year when it is not rented.
Credit Cap
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The federal government now imposes a cap on how much an individual can claim in energy efficiency tax credits over his lifetime. Under the 2010 legislation, a taxpayer who received $500 or more between 2006 and 2010 is no longer eligible for these incentives on any type of purchase or property. Another restriction: A recipient of an energy tax credit cannot receive more than the total amount he owes in federal income tax.
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Ineligible Products
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For existing structures that are principal residences, homeowners can qualify for a tax credit of 10 percent of the cost of many types of energy efficient products, up to $500, or a specific amount between $50 to $300. These products include heating, ventilating and air conditioning systems, known as HVAC; biomass stoves; wall insulation; roof materials; nonsolar water heaters; windows and doors. However, certain popular, power-saving items are ineligible for incentives. For example, tax credits are not offered for programmable thermostats and power factor correction devices.
Filing a Claim
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Energy efficiency tax credits are not income-restricted, so any taxpayer whose property and products qualify may file a claim. A claim against federal taxes for 2011 must appear on 2011 IRS Form 5695, filed with other tax returns by April 15, 2012. Alternatively, the energy credit can be claimed on line 52 of IRS Form 1040. Claimants should save sales receipts. Also, because not every brand meets the energy efficiency standards set by the government, it is important to obtain a manufacturer's certification statement.
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References
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