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Residential Energy Tax Credits Form 5695; see also IRC §25C and §25D and IRS Pub. 17 See Tab 24 for energy tax incentives for businesses. Personal (Nonbusiness) Energy Property Credit Taxpayers can claim a credit for certain home improvements placed in service in 2011 (IRC §25C). This credit for personal energy property was also available for qualifying improvements placed in service in 2006–2010, except for 2008. Allowable credit: Personal Energy Property Credit—Qualifying Property (2011) Summary: (1) credit equals 10% of cost of qualified property, (2) $500 credit limit (aggregate) and (3) taxpayer’s main home only. improvements and 100% of the cost of Maximum certain energy property (subject to limits) Credit per Product Energy Requirements Item Must use no more than 2% of the furnace’s $ 50 Advanced Main Air Circulating Fan1 total energy. • Split systems: HSPF ≥ 8.5; EER ≥12.5; SEER ≥ 15. • Package systems: HSPF ≥ 8; EER ≥ 12; SEER ≥ 14. Thermal efficiency rating of at least 75% as measured using a lower heating value. • Split systems: EER ≥13; SEER ≥ 16. • Package systems: EER ≥ 12; SEER ≥ 14. Not all ENERGY STAR products qualify. Energy factor ≥ 2.0. All ENERGY STAR qualified electric heat pump water heaters qualify. 300 AFUE ≥ 95. Gas, Oil or Propane Hot Water Boiler1 Energy factor ≥ 0.82 or a thermal efficiency Gas, Oil or Propane Water Heater1 of at least 90%. Must meet 2009 IECC (including Insulation2, 3 supplements) prescriptive criteria. To qualify, its primary purpose must be to insulate. Therefore, insulated siding does not qualify. AFUE ≥ 95. Natural Gas or Propane Furnace1 AFUE ≥ 95. Oil Furnace1 150 Metal roofs with appropriate pigmented coatings and asphalt roofs with appropriate cooling granules that also meet ENERGY STAR requirements. In combination with the exterior window/door over which it is installed: has a U-factor and SHGC of 0.30 or below and meets the IECC prescriptive criteria. ENERGY STAR qualifies. U factor ≤ 0.30; SHGC ≤ 0.30. ENERGY STAR qualifies. 500 Air Source Heat Pump1 Biomass Stove1 and 100% of the cost of certain energy property (subject to limits). Central Air Conditioning1 •The credit is equal to 10% of the cost of qualified energy-efficient property or improvements. •The credit is limited to (1) $50 for each advance main air circulating fan; (2) $150 for each natural gas, propane or oil furnace or hot water boiler and (3) $300 for each item of: (a) electric heat pump water heaters, (b) electric heat pumps, (c) biomass fuel stoves, (d) high-efficiency central air conditioners or (e) natural gas, propane or oil water heaters. •The total amount of credit that can be claimed in 2011 combined is $500 ($200 for exterior windows and skylights). This amount is reduced (but not below zero) for any credits claimed in 2006–2010. •There are no AGI or income limits so all individuals can claim the credit. •For 2011, the credit can offset regular tax and AMT. •The credit is reported on Part I of Form 5695, Residential Energy Credits. Qualifying property. See the Personal Energy Property Credit— Qualifying Property (2011) table in the next column for descriptions of property that qualifies for the credit. The property must be installed on or in the taxpayer’s principal residence that is located in the U.S. (new construction, vacation and rental homes don’t qualify). The improvement must be new (not used) property. Qualifying property must meet technical requirements related to energy savings. Taxpayers are not required to determine whether these requirements are met. Instead, a manufacturer’s certification statement (that the property meets the technical requirements) generally is required to claim the credit. N Observation: For 2009–2011, qualifying property is slightly different that what qualified in 2006 and 2007. The changes include the addition of biomass fuel stoves and asphalt roofs (with appropriate cooling granules) and the removal of geothermal heat pumps (which now qualify for the residential energy efficient property credit discussed in the next column). Also, the technical requirements regarding energy efficiency for many types of property have been updated. Property used partly for business. If the home is used partly for business (for example, a home office), any qualified expenditure must be allocated between nonbusiness and business use if the improvement is used more than 20% for business. If allocation is required, only the portion of the expenditure allocated to nonbusiness use qualifies for the credit. 12-12 2011 Tax Year | Premium Quickfinder ® Handbook Electric Heat Pump Water Heater1 Roof (Metal and Asphalt)2, 3 Exterior Storm Windows & Doors2, 3 Windows and Skylights2, 3 300 300 300 300 500 150 150 500 200 Installation costs also qualify. 2 Installation costs not included. SOURCE: www.energystar.gov. 3 Qualified improvement. 1 Residential Energy Efficient Property Credit Taxpayers can claim a tax credit for residential energy efficient property placed in service in 2011. (IRC §25D) The credit is equal to 30% of the cost of the following property: •Solar energy systems (water heating and electricity). •Fuel cells. •Small wind energy systems. •Geothermal heat pumps. There is no limit on the credit amount except in the case of fuel cells, where the credit limit is $1,000 per kW of capacity. The credit is claimed in Part II of Form 5695 and is allowed against regular tax and AMT. Other rules: •The credit (other than for fuel cells) is restricted to equipment for the taxpayer’s personal residence, which must be in the U.S. The credit for fuel cell property is only available for a principal residence.