2009-2016 Tax Credits for Solar, Wind and Geothermal

This is my personal favorite tax credits ever.  These credits are uncapped and unlimited when you install solar, wind, or geothermal energy improvements in ANY personal residence you own.

The credit is 30% of what you spend on the qualifying improvements and carries over if you do not use it all in the year of installation.

In addition to the hard cost of the above, you can also count the labor it costs you to install these improvements.

WHEN – if the installations are an improvement to an existing home, you can claim the credit in the year in which the installation is complete and carry over any of the credit you cannot use in that year.  If you are reconstructing or constructing a home, you qualify for the credit when your original use of the structure begins.

CLARIFICATION OF HOMES THAT QUALIFY – there will probably more regulations coming out on this issue.  Right now the law says the dwelling must be located in the United States and used by you as a residence.  If you use a vacation home, then it is felt that the vacation rental rules apply as to whether the home will be considered a residence or not.   A vacation home is considered a residence if your personal use exceeds 14 days or 10% of the days rented at a fair rental price.

In addition, motor homes in which you stay overnight, homes that may have a mother-in-law apartment in which a relative lives for free, a live-aboard (even part time) boat, mobile home etc all qualify.  It must contain a sleeping space, toilet and cooking facilities.

There are specific guidelines of what qualifies.  I will be covering that throughout the year.  They all appear to be extremely “user friendly” and not complicated.  For instance, all Energy Star solar water heaters qualify – and the same goes for the Energy Star thermal energy source units.  If co-ops or condominium associations do these improvements in shared areas, your share of the credit will be allocated on the same basis as your Homeowner Dues and Assessments.

If you claim a home office credit or rent a portion of your home out – as long as your personal use is 80% or more 100% of the expense qualifies for the credit.

You do have to deduct the tax credit you are able to claim from the basis of your home when it is sold.  In other words,  if you invested $300,000 in your home and you received a $20,000 tax credit, your basis would be $280,000.

I’m sure lots more information will be coming out on these credits throughout the year.

In addition to the solar/wind/geothermal credits there is also a smaller Energy Credit for 2009 and 2010.  This similar to the old Energy credit affecting windows, doors etc.  I will post a detail Article on this credit soon.

A really great resource for information on all this is www.energystar.gov/tax_credits.