Save with Some Green Tax Credits
The income tax credit for certain qualified residential alternative energy expenditures is still available through 2016. The credit has been extended in part through 2021 by the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). So, you still have time to save both energy and taxes by making some eco-friendly investments.
What qualifies
The tax credit for residential alternative energy expenditures equals 30 percent of qualified alternative energy expenditures through 2016. Beginning in 2017 the credit is only available for solar electric property and solar water heating property. The credit is 30 percent through 2019 then is reduced to 26 percent for year 2020 and 22 percent in 2021.
Examples of improvement investments potentially eligible for the 30 percent credit in 2016 include:
• Eligible solar water heaters,
• Solar electricity equipment,
• Fuel cell plants,
• Small wind energy property, and
• Qualified geothermal heat pump property.
The taxpayer’s basis in their home must be reduced by the amount of the credit allowed. Also, the credit is a nonrefundable tax credit. This means that it can only be taken to the extent of your income tax. The credit is available against alternative minimum tax as well. Any credit amounts in excess of the taxpayer’s tax liability are available for carryover to the next year.
Manufacturer certifications required
When claiming the credit, you must keep with your tax records a certification from the manufacturer that the product qualifies. The certification may be found on the product packaging or the manufacturer’s website. Additional rules and limits apply. For more information about these and other green tax breaks, contact Ciuni & Panichi, Inc. Partner Tony Constantine, CPA, at 216-831-7171 or tconstantine@cp-advisors.com.
© 2016
