Tax Breaks for Energy Efficient Appliances

This week we hear from Mike in Reisterstown:

Dear Alice,

We bought some new energy efficient appliances this year. Don’t we get a tax break for doing this? 

Mike

Dear Mike,

Good for you for getting more energy efficient appliances. It’s a win-win for your wallet and the planet. 

Although I have seen rebates from various manufacturers, unfortunately, the energy tax credits available are not for kitchen or laundry appliances. The federal energy tax credits are generally 30 percent of cost and there is a maximum credit limit of $1,500 in most cases.

Tax credits are available for qualified property such as Biomass stoves, heating, air conditioning, ventilating, insulation, roofs, water heaters, windows and doors. Make sure to keep the documents that certify your HVAC and other home improvements as energy efficient, and note that the energy efficient products must be installed at your principal residence.

Unfortunately, energy efficient improvements to rental properties are not eligible. The really great news is, although this credit was scheduled to expire at the end of 2010, it has been extended through this year, so there is still time to consider investing in energy efficient improvements for your home. For anyone who did purchase qualifying property last year, use form 5695 to claim the credit on your 2010 tax return.

Many Happy Returns!

Alice A. Reid, EA

Disclosure: The nature of taxation is complex and information used to complete your personal tax return is dynamic – meaning that one area of your tax return can affect others, while our goal is to provide you with good general information, IRS may require certain documentation or substantiation to support any tax position you take on your tax return. If your issue is complex we recommend you talk to a tax professional who can better understand your entire tax situation and advise you appropriately.