How to Get The Tax Credit for Your Home Renovations
The government provides home renovation tax credit for making energy-efficient improvements to your home. A large number of homeowners have already taken advantage of this program in the last two years. Taking into account the huge success of the program, the government has provided an extension of the project. Here are some of its important points:
Reduced Limits – During 2009 and 2010, the amount of home renovation tax credit allowed was 30% of the total improvement cost with a maximum limit of $1,500 per tax payer. During 2011, the amount available has been reduced to 10% of the total home improvement cost with the limit per tax payer set at $500.
Partial tax credits – The total available credit is limited to a maximum of $500. However, there are certain categories of improvements that limit the amount of available credit to a lower amount.
Requirements – The individuals taking benefits of the credit should be paying taxes on time. The home on which the credit is availed should be the primary residence of the claimants and they should reside in the home. The program expires on 31st December 2011. The benefit is available only to those home owners who have not already claimed the benefits under the previous provisions of 2009 – 2010 and 2005 – 2008 credit programs.
Eligible products – The program includes a large number of energy-efficient home improvement products. Below is a list of the eligible products:
• A maximum home renovation tax credit of $200 can be availed for installing doors and windows that are energy efficient. The credit is available only on the cost of the doors and windows and excludes installation costs incurred.
• Cost of energy efficient water heaters and their installation are given a maximum benefit of $300 under this program.
• All costs excluding installation costs, incurred on insulating the homes with spray foam, fiber glass or blow-in cellulose are eligible for the credits. However, home owners have to ensure that the insulating materials adhere to the IECC guidelines.
• Various HVAC components, such as air handlers, furnaces, heat pumps, central units, boiler systems and propane systems are eligible for a maximum credit of $300 including the installation costs. However, the furnaces used have to be at least 95% energy efficient.
• Home renovation tax credit for biomass stoves is available for a maximum sum of $300.
• Homeowners can also avail of tax credits for metal and asphalt roofs but this excludes the installation costs.
Application Procedure – If you wish to avail of a home renovation tax credit, you can claim the benefit through the 2012 tax returns. An additional form issued by the tax bureau has to be appended to the tax return form.
The 2011 home renovation tax credit package has substantially decreased in terms of benefiting homeowners in undertaking energy-efficient home improvements. Experts feel that people could be discouraged from taking advantage of this credit due to the less number of stimulants offered under the current program. You may want to consider this properly before embarking on a decision or make more inquiries from experts on the issue.