Video: The 2010 Energy Tax Credit
Note: The content of this video applies only to taxes prepared for 2010. It is included here for reference only.
Question: My husband and I installed insulation in our home this summer. Does it qualify for a home energy credit on our 2010 taxes?
Narrator: Hi, I’m Tiffany Smith from TurboTax. Yes, insulation does qualify for a home energy credit on your 2010 taxes. Let’s take a look at how you can take advantage of this great tax break.
First, let’s consider what types of homes are eligible. Only your primary residence qualifies—no rental, investment or business properties. But the good news is that in addition to a traditional house, your primary residence can also be a houseboat, mobile home, co-op or condo.
Now let’s talk about the tax credit. It’s called the Nonbusiness Energy Property Credit. You can take a credit for 30% of what you paid for your insulation up to $1,500--as long as the improvement makes your home more energy-efficient.
Since it’s a tax credit, it’s a dollar-for-dollar reduction in your tax bill. If you spent $4,000 on the insulation, that would qualify you for a $1,200 credit. And you’ll lower your energy bills at the same time.
Have you made any other home improvements this year? You can also take a credit on the cost of storm doors, windows and certain kinds of roofs—any upgrade that adds energy efficiency to your home. The credit also applies to water heaters, biomass stoves, furnaces, hot water boilers—even central air-conditioning.
But remember, not every home improvement is eligible. And some improvements include installation costs in the amount eligible for the credit while others don’t. Check out the guidelines on the IRS website. And hurry—the credit is only for improvements you make by December 31, 2010.
Lower energy bills and lower taxes? That’s a combination you just can’t beat.
And remember, if you use TurboTax, to calculate the credit we’ll ask some simple questions about the improvements you made to your home, plus look for every credit and deduction you deserve.