Tax Insights

Your Guide to State, Local, Federal, Estate + International Taxation

Nonbusiness energy property credit

energy credit, tax, green homeAlmost everyone enjoys hearing about new tax credits and looking to see if it can benefit them on their personal or business return. The new Secure Act tax law includes an update to the nonbusiness energy property credit. What does this mean for you?

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  • The credit has been retroactively extended from December 31, 2017 to property placed in service before January 1, 2021. You may want to consider the cost vs. benefit of amending your prior year return.
  • What is the credit? Well the credit consists 10% of the cost of qualified energy efficiency improvements and 100% of residential energy property costs. Some examples range from making upgrades to exterior doors, windows, using certain roofing materials to natural gas, propane or oil furnaces and electric heat pumps.
    • The credit is worth a maximum of $500 for all years combined from 2006 through January 1, 2021.
      • Max of $200 can be used for windows placed in service after 2005.
      • Max of $50 can be used for any advanced main air circulating fan.
      • Max of $150 for any qualified natural gas, propane or oil furnace or hot water boiler
      • Max of $300 for any other single residential energy-efficient building property improvement.
        • The new law made technical corrections to the definition of energy efficient building property from “an electric heat pump water heater which yields an energy factor of at least 2.0 in the standard Department of Energy test procedure” to “an electric heat pump water heater which yields a Uniform Energy Factor of at least 2.2 in the standard Department of Energy test procedure.” Note the amendments for technical corrections apply to property placed in service after December 31, 2017.
        • Click the link to Form 5695 instructions for more detail on what property qualifies and what amounts can be taken.–dft.pdf

Overall, it’s a good idea to keep in mind some of the credits that may be available to you. To read more on possible credits you or someone you know may qualify for, check out this article about tax credits given to charitable and foster organizations.

Feel free to reach out to your CPA at Henry & Horne with any questions or what credits you may qualify for. For more information on how Henry+Horne can bring our tax expertise to you, check out our Accounting Services page.

Meghan Metzger, MSA