This week’s weather might be a breeze compared to what the rest of the summer has been like, but don’t drop your sun-guard just yet. Instead, use this brief cool-spell to go out and invest in some energy efficient renovations, like a new central a/c unit.
The Residential Energy Property Credit allows businesses and individuals who invest in energy efficient improvements to apply a tax rate credit of 10% to the total costs of qualifying equipment and energy usage costs for a maximum deduction of $500. More specifically:
You may be able to take a credit equal to the sum of:
- 10% of the amount paid or incurred for qualified energy efficiency improvements installed during 2012, and;
- Any residential energy property costs paid or incurred in 2012.
However, this credit is limited as follows:
- A total combined credit limit of $500 for all tax years after 2005.
- A combined credit limit of $200 for windows for all tax years after 2005.
- A credit limit for residential energy property costs for 2012 of $50 for any advanced main air circulating fan; $150 for any qualified natural gas, propane, or oil furnace or hot water boiler; and $300 for any item of energy efficient building property.
Hint: “any item of energy efficient building property” could mean your new a/c system
The credit was set to expire in 2011, but has since been extended twice through December, 2013. So, if you’re thinking about adding or upgrading your air conditioning system, now’s the time time to do it!
Be warned, this is a one-time deal. The tax credit, filed on IRS form 5695, can only be submitted once in a lifetime.
Need help? Check out Energy Star’s guide here (or of course contact your local tax experts – the experienced attorneys at JDKatz).
Stay hydrated out there!
JDKatz, P.C. is a full-service law firm focused on tax law and estate planning. We are dedicated to minimizing your existing liability and risks while providing valuable tax planning to streamline your tax issues in the future. Please call us at 301-913-2948 to schedule an appointment to meet with one of our trusted attorneys.