The federal government created residential energy credits as part of the Energy Policy Act of 2005. These credits are meant to encourage the use of energy-efficient products in the building and maintenance of residential homes. If you used certain energy-saving materials such as roofing, insulation, windows and doors that meet Energy Star requirements when building your home, you may qualify to claim a tax credit of up to $1,500 for individuals or $2,000 per qualifying home for qualifying contractors.
1. Keep detailed records and receipts for all energy-efficient materials used while building your home. This includes exterior windows, doors, insulation, roofing, solar panels, and certain heating and cooling systems. Refer to the instructions for IRS Form 5695 for additional guidance on what materials do and do not qualify for residential energy credits.
2. Complete Form 5695 using the information you have gathered from your home building records. Fill out section 1 to claim the Non-business Energy Property Credit or section 2 to claim the Residential Energy Efficient Property Credit. Use the Credit Limit Worksheet found in the instructions to figure your credit limitation based on your tax liability.
3. Enter the amount of your credit on Form 1040 line 52 or line 49 if you are using Form 1040 NR. Fill in the rest of your tax return to determine any tax refund or balance due.
1. Determine how many homes you produced that meet the 50-percent and 30-percent energy efficient standard. In order to qualify, a home must meet certain energy saving requirements and be certified. For additional details on qualifying homes, see the instructions for Form 8908.
2. Enter the number of qualifying homes built that meet the 50-percent standard on line 1a of Form 8908. Multiply this number by $2,000, and enter the sum on line 1b.
3. Enter the number of qualifying homes built that meet the 30-percent standard on line 2a of Form 8908. Multiply this number by $1,000, and enter the sum on line 2b.
4. Add the totals of lines 1b, 2b and any credit amounts for partnerships or S corporations reported on line 3. Enter this amount on line 4 of Form 8908.
5. Report the amount shown on line 4 on Form 3800 line 1p or on Schedule K for partnerships or S corporations.
Items you will need
- Form 5695 Residential Energy Credits
- Form 8908 Energy Efficient Home Credit
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