Federal and Massachusetts energy tax credits For Individual Taxpayers

The Tax Relief and Job Creation Act of 2010 extended the Residential Energy Property Credit through 2011, expiring on December 31, 2011.  The credit was available for property placed in service in 2011 with revised rules and limitations but has yet to be extended for tax year 2012.

The Non-business Energy Property Credit was designed for homeowners installing energy efficient improvements such as insulation, new windows, doors, certain roofs and furnaces.  The 2011 credit rate was 10 percent of the cost of qualified energy efficiency improvements.  The cost of installation did not count towards the credit.

The credit could also be claimed for the cost of residential energy property such as certain high-efficiency heating and air conditioning systems, water heaters and stoves.  Labor costs for installation could be included here.

The 2011 credit had a lifetime limit of $500, of which only $200 could have been used for windows.  If the total of non-business energy property credits taken in prior years since 2005 was more than $500, the credit could not be claimed in 2011. 

In order to qualify for the credit, the improvements must have been placed into service to the taxpayer's principal residence located in the United States before January 1, 2012.

Eligible homeowners could claim this credit on Form 5695, Residential Energy Credits with their 2011 federal income tax return.

Please contact Feeley & Driscoll's Boston Accounting team by Email or call us at 1 (888) 875-9770.

Updated May 2012

related links