25.19 Residential Energy Credits

On Form 5695 for 2012, you can claim the residential energy efficient property credit (REEP) which covers qualifying solar, wind, geothermal and fuel cell costs.

The credit that applied in 2011 for energy efficient home insulation, storm windows, heaters, furnaces, boilers, and air conditioners expired at the end of 2011, and when this book went to press, it did not appear likely that Congress would retroactively provide a credit for 2012 improvements, although proposals for an extension had been made; see the e-Supplement at jklasser.com for an update.

Law Alert

Credit for Home Energy Efficiency improvements Expired at End of 2011

Unless new legislation is enacted, there will be no credit for energy efficiency improvements such as insulation and storm windows placed in service after 2011. Proposals to extend the credit have been made, but it was not clear when this book went to press if Congress would pass the extension; see the e-Supplement at jklasser.com for an update.

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Residential energy efficient property (REEP).

On Form 5695, a 30% credit is allowed for the cost of qualified residential solar panels, solar water heating equipment, wind turbines, and geothermal heat pumps installed in a home located in the United States. The residence does not have to be your principal residence. The credit includes the cost of labor for onsite preparation, assembly and installation. There is no dollar limit on the 30% credit. However, no credit is allowed for costs allocable to heating a swimming pool or hot tub.

There is also a 30% credit for qualified fuel cell property. This property must be installed in your principal residence located in the United States. The 30% credit is subject to a limit based on kilowatt capacity. The fuel cell property must have a capacity of at least one-half kilowatt of electricity and the credit cannot exceed $500 for each half-kilowatt of electric capacity generated.