Okay, before I get too deep into the tax credit, I need to preface this post with a piece of advice: “Do not ask your contractor for tax advice.”
So, the gist of the credit is that homeowners can receive a credit of 30% of the cost of any qualifying energy efficient improvements made to their home, up to a maximum of $1,500.
The credit covers the cost of improvements such as insulation, exterior doors, exterior windows, HVAC systems, etc.
The three problems out there that I have seen are:
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Some contractors and home improvement stores are telling people that if they spend $1,500, they will receive the full $1,500 credit. The credit is equal to 30% of the cost of the improvements. So, if the homeowner spends $1,500, their maximum credit is $450, not $1,500.
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Some contractors and home improvement stores are not explaining the fact that this is a cumulative credit, not a per-purchase credit. If you spend $8,000 on a new HVAC system and you qualify for the full $1,500 credit, you cannot then spend $6,000 on new windows and receive another $1,500 credit. The maximum credit is $1,500 no matter how many separate purchases you make
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Some contractors and home improvement stores are not notifying owners of second homes, vacation homes, investment properties, or rental properties that they are not eligible for this credit. This credit applies only to homeowners making energy efficient improvements to their primary residence
So, don’t ask your contractor for tax advice, don’t ask your CPA how to cook a good pizza, and don’t ask the ice cream man to build you a new deck!
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