If you have made renewable energy improvements to your home, or you are considering them, you should know about the Federal Residential Renewable Energy Tax Credit. The Federal Residential Renewable Energy Tax Credit is a program that gives a huge tax incentive to people who install solar-electric systems, solar water heaters, geo-thermal heat systems, fuel cells and/or wind turbines. If you have installed a renewable energy system, or you are planning to install one, the tax credit can help you recoup a large portion of your initial investment.
A Brief History
The Energy Policy Act of 2005 was the first act to establish tax credit for residential renewable energy installations. The Energy Improvement and Extension Act of 2008 and The American Recovery and Reinvestment Act of 2009 further strengthened and extended the original act. As of this writing, the tax credit is available until 2016, although there is a good possibility that this deadline will be extended as it has in the past.
Who Is Eligible?
If you have a solar-electrical system, solar water heater, geo-thermal heat system or wind turbines that were installed after 12/31/2008 then you are eligible for a 30% tax credit with no maximum amount. If you had your system installed before 1/1/2009, then there is a maximum credit of $2,000. In the case of wind turbines installed before 1/1/2009, the maximum credit is $4,000. Additionally fuel cells need to have been installed after January 1, 2006 and the maximum credit is $500 per half kilowatt. There are certain federal Energy Star requirements for renewable energy systems, so if you are planning an installation, then you should consult with a professional about which systems are eligible to receive the tax credit. If you already have a renewable energy system installed, you should consult with a tax account to find out if you can still claim the credit.
The home or homes served by the solar panal installation system do not have to be the taxpayer‘s primary residence, except in the case of fuel cells, where only the taxpayer‘s primary residence is eligible. For solar water-heating systems, the Solar Rating Certification Corporation (SRCC) or a comparable state agency must certify the system for performance. Additionally, the solar water-heating system must heat at least 50% of the home’s water. Hot tubs and swimming pools with solar water heat are ineligible for the tax credit. Fuel cells must generate at least .5 kilowatts and have electricity generation efficiency greater than 30%.
Although determining your eligibility may seems confusing, it is actually not that difficult. Most renewable energy systems installed after 12/31/2008 are eligible. However, you should check with the IRS or with a tax accountant if you are not certain. If you are planning on installing a new renewable energy system, than you should definitely consult with the company doing the installation to make sure that you get a system that will get you the tax credit so that you can offset your initial investment.
About the Author: Odette Maupredi has spent months researching residential solar panel benefits and highly recommends everyhomeowner look into both state and federal energy programs. You could stand to save quite a bit of money if you can afford to participate.