Improvement Tax Credit for 2011
For 2009 and
2010, the tax credit was 30% of the cost
of the home improvement, up to $1,500.
The new rules substantially reduce the
credit you are eligible for. Instead of
30% of the cost, you can get a credit
for up to 10% of the cost — and the
credit is capped at $500. Additionally,
there individual caps on particular
- Energy efficient windows: $200
- HVAC components: $300 cap
- Water heater: $300 cap
- Biomass stove: $300 cap
metal or asphalt roofs do not come with
individual caps, but once you reach that
$500, you have maxed out your credit.
Realize, too, that the credit won’t
cover installation costs for all of the
items — except, installation is included
for HVAC components and water heaters.
If you have
already taken home improvement credits
in the past that total more than $500,
you are ineligible for the 2011 credit.
However, if you took a credit of $200 in
the past, you can still take $300 for
the 2011 tax year. Realize, too, that
you can only take this credit if you
make the improvements to an existing
primary residence. No second homes, new
construction or rentals are eligible.
You must have these items installed
between January 1, 2011 and December 31,
2011 to qualify.
Systems for Your Home
It is worth
noting that the tax credit for green
energy systems for your home remains
intact until December 31, 2016. This tax
credit is meant for those who install
solar panels, geothermal heat pumps
and/or residential wind turbines. This
credit is worth up to 30% of the cost of
the system, including installation.
There is no upper limit.
you can get this tax credit if you
install the system in your second home,
as well as in your primary residence.
New construction homes are eligible as
well as existing homes. However, you
cannot take the tax credit if you are
making this improvement to a rental
installation is also included in a tax
credit that lasts until the end of 2016.
You can get up to 30% with a cap at $500
per 0.5 kW of power capacity. However,
second homes (and rentals) do not
qualify for this tax credit.
You can visit
the government’s Energy Star web site
for more information on
will be provided when the time comes to
begin preparing tax returns for 2011.
Right now, tax returns are for 2010, so
those returns will need the Form 5695 to
be filed with the Form 1040. You should
save your receipts and there should also
be a Manufacturer’s Certification
Statement. Make copies of these items,
and keep the originals somewhere safe.
You will want to have documentation
ready to back up your claim of credit.
The 2011 home
improvement tax credit is less generous
than credits of the past, but it is
still better than nothing, and can be
helpful when added to other