In the midst of the budget crisis in Washington, home energy tax credits were retained for the 2012 tax year. That means you can claim a 10% credit for up to $5,000 worth of qualified energy-efficient improvements, including replacement windows and doors; Energy Star appliances; insulation; and installing more energy-efficient heating and cooling systems.
Be sure to review the specifics carefully via IRS Form 5695. And audit your receipts to verify that the materials and appliances you bought qualify. For maximum return, include these factors as you estimate the value of the credit:
• Energy-efficient features are nice to have, but they’re not necessarily compelling to potential buyers, according to the National Association of Realtors. Do not expect a high resale return on new replacement windows and doors.
• If you are selling soon, do translate the benefits of energy-efficient features to money saved monthly through trimmed utility bills. If you hope to include these improvements in a sales package about your house, show the before-and-after cost savings captured by the improvements. This will illustrate to buyers the potentially higher cost of houses with less energy-efficient features, making your house a stronger candidate by comparison. And by breaking down the monthly utility cost, buyers can closely estimate the cost of owning the house.
• Remember that tax credits for energy-efficient upgrades are cumulative for the past several years, topping out at $500. Review your credits for the past several years to make sure you are claiming up to that $500 total.
For more on energy efficiency, consider: