Energy Tax Incentives Act of 2005 - Energy-saving Property for Your Home
Find out more ways to take advantage of the Energy Tax Incentives Act of 2005 in your home.
Beginning in 2006, individuals will be allowed to claim a nonrefundable credit for the purchase of energy-efficient improvements such as insulation, windows, doors, furnaces, hot water heaters, and heat pumps and metal roofs. All property must meet Energy Star program specifications to qualify.
What kinds of property qualify?
Expenses must be for new property installed in or on a dwelling unit located in the U.S. and used by the taxpayer as his principal residence. There are two types of qualifying improvements:
- Qualified energy-efficiency improvements, which include insulation, exterior doors and windows, and certain metal roofs.
- Residential energy property includes an advanced main air circulating fan, a qualified natural gas, propane, or oil furnace or hot water boiler, and other energy-efficient building property.
How is the credit calculated?
The credit is the sum of:
- 10% of qualified energy efficient insulation, doors, and qualifying metal roofing.
- 10% of the cost of qualifying windows, up to a maximum credit of $200.
- 100% of residential energy property expenses, subject to dollar limitations: $150 for a furnace or hot water boiler, $50 for a circulating fan, and $300 for other property.
Important: There is a $500 maximum lifetime limit on this credit.
Example: Manfred pays $1,200 to install energy-efficient insulation and $800 for a qualified natural gas hot water boiler for his principal residence. He is eligible for a credit of $270 ($1,200 qualified energy efficiency improvement x 10% + qualified energy property limited to $150 for the boiler). Manfred has $230 remaining available credit for other energy efficient property he purchases in 2006 or 2007.
Return to Energy Tax Incentives Act of 2005
