Princeton Town Topics – Let’s Talk Real Estate – March 27, 2013
ENERGY TAX CREDIT UPDATE
Good news for homeowners! During the recent “fiscal cliff” agreement, Congress voted to retroactively renew the Energy Tax Credits that expired in 2011. So if you improved your home with energy efficient upgrades this past year, you may be eligible to get a tax credit on your 2012 return. This is a much better deal than a tax deduction, which only reduces your taxable income. With tax credits, you get a real dollar for dollar deduction in your total tax liability.
You claim must be limited to a lifetime total of $500, but different products have their own spending cap. For example, you can claim 10% on $50-$300 worth of energy efficient windows, a water heater or a new roof. While other improvements, like solar energy systems, have no cap.
These credits only apply to improvements done on your primary residence. So if you made any energy efficient upgrades last year, it’s worth checking out www.energystar.gov to see if you qualify for a tax break.