Many of the Bush tax cuts have now expired, but good news is that one major tax incentive, the energy efficiency tax credit, got an extension. Both upgrades made to existing homes, and new purchases in 2012 and 2013 can be used to get the tax credit for energy efficiency. This tax credit can cover up 10 percent of the cost of new energy efficient equipment, up to $500. The qualifying energy-efficient products include, insulation, air sealing homes, duct sealing, windows, heat pumps, air conditioners, water heaters, and furnaces.
New Homes Tax Incentive to Builders
Builders of new homes can use the new home tax credit to reduce their tax liability. Home builders who build high-efficiency homes can avail the $2,000 tax credit. The qualifying criterion is that the new homes built must use 50 percent less heating and cooling energy than homes that met standards of the 2006 International Energy Conservation.
Appliance Credit to Manufacturers
Manufacturers can use the appliance tax credit if they are building energy-saving, high-efficiency products, namely refrigerators, dishwashers, and clothes washers. For 2012, you can only use this tax credit if you qualify for higher tiers of efficiency. Check the IRS website to see the qualifications for each tier.
The appliance tax credit was introduced to provide incentives to manufacturers to come up with products that save energy and/or to increase the production of high-efficiency dishwashers, refrigerators, and clothes washers.
Filing for Energy Efficiency Tax Credits
You can use the following IRS forms to file for different energy efficiency tax incentives:
- For the new homes tax credit, use IRS Form 8908
- For residential energy efficient property, use IRS Form 5695
If you are conserving energy, you can make use of these tax credits when filing taxes in 2013 to reduce your tax liability.
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