TurboTax / Tax Calculators & Tips / All Tax Guides / Tax Deductions and Credits / What Are Home Renovation Tax Credits?

What Are Home Renovation Tax Credits?

Updated for Tax Year 2015


OVERVIEW

If your home-renovation project includes the installation of energy-efficient equipment, a tax credit may be available to you.


Renovating your home can be an expensive endeavor, especially since you can't claim a federal tax deduction to defray the costs. However, if your home-renovation projects include the installation of energy-generating equipment, then you may get some relief by claiming a tax credit. Even if you don't qualify, at least you can reduce your taxable gain when you sell the home by the cost of the renovations. Remember to file away and keep all receipts.

Alternative energy renovations

The residential energy-efficient property credit, intended to stimulate your investment in alternative energy equipment, allows you to include an unlimited amount of costs when calculating the credit. You can claim the credit for renovations you make to any home you own that you use for personal purposes, and even ones under construction.

When calculating the credit, include a percentage of the purchase price and the cost of labor for installation. Equipment that qualifies for the credit includes solar-electric panels, solar hot water heaters, geothermal heat pumps and wind turbines. The only purchases that have a maximum credit limitation are the costs paid to purchase and install certain fuel cells. As long as the manufacturer provides a statement claiming the equipment will improve the energy efficiency of your home, this is sufficient for you to claim the credit. These credits, witht he exception of the solar credits, expire at the end of 2016.

For solar equipment, the credit is available through the end of 2019. After that, the percentage steps down each year and then stops at the end of 2021.

Claiming the credits

When you are ready to prepare your tax return, complete and attach IRS Form 5695 to claim the credit. Since these are all nonrefundable credits, their maximum savings is limited to the amount of tax you actually owe for the year.

When you use TurboTax, we'll determine which deductions and credits you qualify for, and fill in all the right forms for you.

Get every deduction you deserve

TurboTax Deluxe searches more than 350 tax deductions and credits so you get your maximum refund, guaranteed.

For only $54.99*
Start for Free

Looking for more information?

The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.


Security is built into everything we do
Here's how
* Important Offer Details and Disclosures
  • Filing Deadline: IRS filing deadline for tax year 2015 is April 18, 2016 (except for residents of Massachusetts or Maine, where the IRS filing deadline for tax year 2015 is April 19, 2016).
  • Try for Free/Pay When You File: TurboTax online and mobile pricing is based on your tax situation and varies by product. Free 1040EZ/A + Free State offer only available with TurboTax Federal Free Edition; Offer may change or end at any time without notice. Actual prices are determined at the time of print or e-file and are subject to change without notice. Savings and price comparisons based on anticipated price increase expected 3/18/16. Special discount offers may not be valid for mobile in-app purchases.
  • TurboTax CD/Download products: Price includes tax preparation and printing of federal tax returns and free federal e-file of up to 5 federal tax returns. Additional fees apply for efiling state returns. E-file fees do not apply to New York state returns. Savings and price comparison based on anticipated price increase expected 3/18/16. Prices subject to change without notice.
  • Anytime, anywhere: Internet access required; standard message and data rates apply to download and use mobile app.
  • Fastest refund possible: Fastest tax refund with efile and direct deposit; tax refund timeframes will vary.
  • Pay for TurboTax out of your federal refund: A $X.XX Refund Processing Service fee applies to this payment method. Prices are subject to change without notice. This benefit is available with TurboTax Federal products except the TurboTax Home & Business/QuickBooks Self-Employed bundle offers.
  • About our TurboTax Product Experts: Customer service and product support vary by time of year.
  • About our credentialed tax experts: Live tax advice service is available via phone for your toughest tax questions; fees may apply. Service, experience levels, hours of operation and availability vary, and are subject to restriction and change without notice. Not available for TurboTax Business customers.
  • #1 best-selling tax software: Based on aggregated sales data for all tax year 2014 TurboTax products.
  • Most Popular: TurboTax Deluxe is our most popular product among TurboTax Online users with more complex tax situations.