The Energy Credit is Still Here For 2013

Editor's Note: This article is part of our >2013 Tax Tips series. Robert Flach is an expert with almost 40 years of experience as a tax professional and also blogs as The Wandering Tax Pro.

NEW YORK (MainStreet)—You can claim a tax credit for a qualified energy-efficient purchase made this year on your 2013 Form 1040.

The American Taxpayer Relief Act of 2012 extended the lifetime $500 "Nonbusiness Energy Property Credit" for qualified energy efficiency improvements or residential energy property costs for your primary principal residence through 2013.

The credit is 10% of the cost, up to a maximum of $500. Some items are limited to a credit of from $50 to $300. The qualifying purchase must be for an existing home that is your principal residence.

As I stated above, the $500 is a "lifetime" limit. If you claimed at least $500 in energy tax credits on your 2006 through 2012 returns, you are not eligible for a credit for 2013. If you claimed $300 in energy credits over the years, the most you can take in 2013 is $200.

The credit is available for -

  • Biomass Stoves
  • Heating Ventilating, Air Conditioning (Advanced Main Air Circulating Fan, Air Source Heat Pumps, Central Air Conditioning, Gas, Propane, or Oil Hot Water Boiler, and Natural Gas, Propane or Oil Furnace)
  • Insulation
  • Roofs (Metal and Asphalt)
  • Water Heaters (Gas, Propane or Oil Water Heater, and Electric Heat Pump Water Heater)
  • Windows and Doors

Not every new window, door, boiler, heater or furnace you buy in 2013 will qualify. There are very specific "energy efficiency" requirements for each of the qualifying items.

For example, to qualify for the credit an advanced main air circulating fan - a fan, or blower motor which blows the air that your furnace heats up through the duct system - must use no more than 2% of the furnace's total energy. The maximum credit allowed for an advanced main air circulating fan is $50, regardless of the cost.