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2011 Tax Credit Frequently Asked Questions:
Q: How much is the tax credit for?
A: For most improvements, the tax credit is 10% of the cost, up to $500
Note: The recent 2010 Tax Credit expired on December 31, 2010 for 30% of the
cost up to $1,500.
Q: How do I claim the tax credit?
You will need to include
Form 5695 (which isn’t yet available for 2011) when you file your
taxes. Remember to keep receipts proving that you purchased the
improvements between 1/01/2011 and 12/31/2011 and a copy of the manufacturer’s
certification, which your contractor should be able to provide. Consult your
accountant or tax preparer for additional guidance.
Q: Does that include labor and material?
A: For improvements on the Shell of your home, (windows, doors, roofing and
insulation), the tax credit covers the 10% of cost of materials only.
Improvements such as new HVAC systems, heat pumps and boilers will cover 10% of
the total installed cost, both labor and material costs. These are subject to
certain caps. For example, furnaces and boilers are eligible for $150. Windows,
Q: What about renewable energy sources?
A: Solar water heaters, solar panels, and geothermal heat pumps are eligible
for a 30% tax credit for labor and material cost with NO cap on the credit.
Q: What if I made improvements before 2011, will a tax credit apply?
A: Unfortunately no, the tax credit only applies to energy improvements
installed after January 1, 2011. You may be eligible for a credit on a prior
year’s return. In 2011 the credit only applies if you have not received more
than $500 in credits since 2006. And you cannot exceed $500 in aggregate
credits since 2006.
For example, if you claimed $900 in credit in 2010, you are not eligible for
the 2011 credit.
If you claimed $100 in 2007, and $250 in 2009, you may be eligible for a
credit of up to $150 on qualifying measures.
Q: When do the tax credits expire?
A: December 31, 2016 for renewable energy sources and December 31, 2011 for
all other energy-efficiency improvements.
Q: Could this apply to my second property?
A: This is applicable to the taxpayers Primary Residence only. Solar water
heaters, solar panels, and geothermal heat pumps may apply to second homes or
Q: What about energy-efficient appliances?
A: Federal tax credits do not apply to small appliances. Local state and city
credits may be available.
Q: Can I use the Federal tax credits in 2009, 2010, and 2011?
A: Yes, but the Federal tax credit has a lifetime cap of $500 on efficiency
measures (you may have exceeded that in 2009 or 2010).except for renewable
energy sources. Therefore, once you reach the $500 limit, you can no longer
apply the tax credit.