Claim energy efficiency tax credit for homeowners before it’s gone

Steve Fishman writes: The federal government wants to encourage homeowners to make their homes as energy efficient as possible. To do so, back in 2005 Congress enacted a tax credit for “nonbusiness energy property.”

This was a tax credit (subject to a $500 lifetime cap) for certain energy efficiency improvements to a taxpayer’s existing principal residence. The credit expired at the end of 2011, but was brought back from the dead by the fiscal cliff tax deal back in February. It was made retroactive to apply to 2012 and then expire at the end of 2013.

So, if you haven’t used up your lifetime $500 limit already, 2013 could be your last chance to do so.

You may claim a credit of 10 percent of the cost of certain energy-saving property that you added to your main home. This includes the cost of qualified insulation, windows, doors and roofs. You can claim no more than $200 in total credits for doors.

You can also obtain the credit if you install specified types of “qualified residential property.” You can get a credit equal to the full cost of the equipment up to the following caps:

• advanced main air circulating fan: $50
• natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
• electric heat pump water heater with an energy factor of at least 2.0: $300
• electric heat pump that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
• central air conditioner that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
• natural gas, propane or oil water heater that has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
• biomass stoves that use “plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues and fibers”: $300

Such property must meet certain energy efficiency requirements for you to qualify for the credit. For purposes of taking the credit, you can rely on a manufacturer’s certification in writing that a product is qualified residential energy property. Do not attach the certification to your return. Keep it for your records.