Are you looking for ways to reduce your energy consumption and cut back on your utility bills? You may want to consider properly insulating your home. Not only can it save you a ton of money in the long run but it can also make your home more energy efficient. Not to mention, with the institution of energy-efficient tax credits, you now have another great reason to get the insulation work done properly.
Energy-efficient Tax Credit
In 2010, Congress pointed to substantial tax credits of 30% of the purchase price with a limit of $1,500 for homeowners who make energy-efficient improvements on their home. While these breaks have been reduced to a mere 10% of the purchase price (up to $500) now, there is still an abundance of ways in which you can find decent cuts on your tax bill by ensuring your home improvements match up to energy efficiency standards.
Claiming insulation tax credits
Here are a few pointers for you to quickly and easily understand what the requirements and stipulations involved in claiming insulation tax credits are.
- For insulation, tax credits are available for 10% of the purchase price, up to $500. Any purchase over $5,000 will not be eligible for a rebate.
- You can only claim the credit for your main home. Vacation homes and rental properties are not applicable, neither is a newly constructed home.
- You must keep a copy of the Manufacturer’s Certification Statement. This is a statutory statement by an insulation manufacturer certifying that the product passes for the tax credit. Make sure the manufacturer of the product you choose has this certification.
- To claim any insulation tax credits, you will need to file Form 5695, Residential Energy Credits Form specifying the amounts you are claiming. This form is to be attached to your tax return form. As a tax credit, it will be deducted from your tax bill and as a result, reduces your taxes dollar for dollar.
Having said that, the tax credits are not refundable and thus, you cannot come in for a refund check against the balance credit that remains unused after deducting the taxes due.
Insulation tax credits are a positive step to help you lower your future energy consumption. They are exceptionally beneficial if you have already completed or are planning an upcoming insulation project. If your home has insubstantial insulation, now is the best time ever to install insulation. Not only may you be eligible to be awarded a tax credit but you will save money on your utility bills and save energy for as long as you are in your home.