I admit I’m disappointed that the 2009-2010 energy efficiency tax credit was not renewed for 2011.
The new tax credit is not much of an incentive – just a 10% credit on energy efficient upgrades, with a cap of $500. Only $200 of that can apply to the purchase of a new furnace, and qualifying furnaces must now be 95% efficient.
But the tax credit for installing renewable energy systems is generous, and it’s with us through December 31, 2016. It offers a credit for 30% of the cost of a renewable system (including installation costs), and has no cap.
Principal residences and second homes qualify – both existing homes and new construction.
Here’s a quick tour of the eligible forward-looking renewable technologies.
Geothermal heat pumps – Because they use the earth’s natural heat, geothermal pumps are among the most efficient heating and cooling technologies available. All ENERGY STAR qualified geothermal heat pumps are eligible.
Small wind turbines (residential) – A wind turbine collects kinetic energy from the wind and converts it to electricity that is compatible with a home’s electrical system.
Eligible systems must have a nameplate capacity of no more than 100 kilowatts.
Solar energy systems:
Solar water heaters use the sun’s thermal energy to heat water and include a collector and storage tank.
At least half of the energy generated by the water heater must come from the sun, and the water must be used in the dwelling – systems for swimming pools or hot tubs don’t count. All ENERGY STAR qualified solar water heaters earn the credit.
Solar panels or photovoltaic systems capture light energy from the sun and convert it directly into electricity. Eligible solar photovoltaic systems will provide electricity for the residence and meet applicable fire and electrical code requirements.
See the full list of tax credits and requirements at www.energystar.gov – click on “Tax Credits for Energy Efficiency.”