Homeowner Personal Tax Credits for Renewable Energy Systems

Homeowner Personal Tax Credits for Renewable Energy Systems

In an earlier post, I outlined personal tax credits for homeowners who make energy efficiency improvements to their homes. Whether you’re considering moving or staying put, improving your home may be a great investment. Energy improvements save you money over the long term
and many of them also come with tax rebates.

Today, I’ll discuss tax incentives for homeowners who install renewable energy technologies. Also sometimes called “alternative” energy systems, these relatively new technologies have been scaled down and developed for residential use. To learn more about each one, do a simple Google search.

Under the Residential Renewable Energy Tax Credit, the following renewable energy systems are eligible for personal tax credits:

  • Solar-electric systems – These small systems produce electricity for your home or office.
  • Solar water-heating systems – These systems use the sun to heat your water.
  • Fuel cell systems – An alternative energy system that generates heat and energy from one unit.
  • Wind-energy systems – With more systems being developed for residential use, wind energy can make a good supplement to traditional utility-based energy.
  • Geothermal heat pump systems – These systems use the earth’s natural temperatures to cool and heat your home.

No credit cap on most systems

The tax credit covers up to 30% of qualified expenditures. In most cases, the home must be located in the United States and be owned and used as a residence by the taxpayer.

To qualify for the tax credit, your renewable energy system has to meet certain requirements, such as minimum capacity and certification standards. Most systems have no maximum credit cap, with the exception of fuel cell systems, which are limited to a maximum credit of $500 per half kilowatt.

Any unused portion of the tax credit can be carried forward until 2016. You can only claim the tax credit after the renewable energy system has been installed.

Check your state for rebates, too

In addition to the federal program, many states also offer incentives for the use of renewable energy sources, such as personal tax credits, loan programs, property tax incentives, sales tax incentives, and rebate programs. To see what’s available in your state, select your state on the DSIRE incentive map.

Not sure if a renewable energy source is right for your home? Energy.gov has planning assistance and tips for homeowners.