Did you make home improvements in 2019? If so, then you may be eligible for certain tax credits when tax season comes. Knowing what kind of home improvements qualify for tax credit can help you save or collect money on your personal income taxes. Here's what you need to know.
Not all home improvements are eligible for a tax credit. In fact, many home improvements are not. Standard kitchen remodels, room additions and bathroom remodels are not generally eligible for tax credit unless a portion of the work involves an energy-efficient upgrade. Below are the two major tax credits available to homeowners in 2019.
Two types of home upgrades qualify for the nonbusiness energy property tax credit. The first type of credit addresses the cost of residential energy through installation of energy efficient equipment. Examples of the type of equipment that are generally eligible for a credit include water heaters, hot water boilers or furnaces run on oil, natural gas or propane, electric heat pump water heaters, biomass fuel stoves, electric heat pumps, propane and certain types of fans for furnaces.
The other types of upgrades that qualify for credit include upgrades regarding exterior doors, exterior windows, home insulation and certain kinds of roofing materials.
The Department of Energy sets the standard for which home improvements and materials qualify for the nonbusiness energy property tax credit. To find out whether a particular type of equipment you installed in your home in 2019 is eligible for the tax credit, read the manufacturer information, or contact the manufacturer directly. Generally speaking, the contractor who performed the installation will also know whether the item qualifies for a tax credit.
Different types of equipment and upgrades have different maximum amounts that you can claim for tax credit, so the best way to ensure that you're complying with the law is to work with your tax preparer and read the law yourself.
If you installed renewable energy technology on your property in 2019, then you may be eligible for the Residential Renewable Energy Tax Credit. This tax credit includes solar, geothermal, wind and fuel-cell technologies. For example:
Most of these credits can be claimed for use in a principal residence or in a second home, however, fuel cell equipment is only eligible if its installed in your principal residence. Homeowners may claim a credit equal to up to 30% of the cost (installation included). The maximum amount that a homeowner can claim for a fuel cell tax credit is $1,000 for each kilowatt or $500 for each half-kilowatt. For wind, solar and geothermal equipment, there is no maximum amount that can be claimed.
If you want to claim a tax credit for installation of an eligible fixture or appliance, or for an eligible home improvement, work with your contractor to get any paperwork that could be helpful for your tax preparer. Your tax preparer will also be able to tell you what he or she needs in order to finish your taxes.
Finally, familiarize yourself with the tax credit to ensure that the item you're installing really is eligible. Many homeowners rely on their contractors to tell them the details of their tax credit, but it's better to know the details for yourself. Knowing these details can help you ensure that the item you're installing in your home really is eligible, and can also help you calculate how much of a tax credit you can claim when the time comes.
Homeowners in Florida have access to a variety of rebate programs, sales tax incentives and loan programs. These programs change year to year, so for the latest information about the types of programs that can benefit you in 2020, check out the DSIRE website. There, you'll find information about programs going back years and even decades, and can get up to date info on programs as things change.
Are you making home improvements in 2020? Check back with the DSIRE website on a regular basis to find out which home improvements qualify for the largest credits. It may be that the home upgrades you want to make just happen to qualify for money back from the state or federal government.
Invest in your home with a home upgrade today. Installation of energy efficient appliances, window upgrades and other repairs can boost your property value. At Gilbert Design-Build, we have nearly 20 years of home construction and remodeling experience. We perform home remodels, additions and more. To get started with your upcoming home improvement, contact us for a free consultation.