Understanding Residential Energy Property Credits

The government has put into place a Residential Energy Property Credit program to benefit taxpayers. It was designed to help ease the transition to "green" sources of energy. Here are the basics of the residential energy property credit program.

Residential Energy Property Credits

When you invest in alternative energy sources for your home, the government is will provide you with a tax credit. You should be able to deduct as much as 30% of the cost associated with switching over. This can be based on the price of the new system as well as the cost to install it. There is no specific dollar limit on this process, unless you are dealing with fuel cells. In that case, you can claim up to $500, for each .5 kilowatt generated.

Other Considerations

For every form of alternative energy except fuel cells, the home must be a home that is used for residential and personal use. If you are using fuel cells, it could potentially be a secondary home. 

Some examples of energy sources that qualify for this credit are solar panels, solar water heaters, wind turbines and geothermal heat pumps. If you are installing one of these systems in your home, you will want to make sure and take advantage of the tax credit. 

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