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Tax Credits

The Federal and State governments have been very generous over the last decade in offering various tax incentives for energy efficiency. Unfortunately most have expired, with the 2014 tax year being the last year for credits for things like insulation, energy efficient furnace and air conditioning, water heaters and thermal windows. Most of the credits were capped at $500 per year and some only applied to a minor portion of the material cost. Just be aware that those tax credits expired with the 2013 tax year. Then in November (I think it was) of 2014 they decreed the tax credit extended retroactively for the 2014 tax year. So it may be possible some senator will stand up this November and ask to extend the tax credit retroactively again thru 2015.

     So for tax year 2015 we are left with the 30% tax credit for geothermal heat pumps, small wind turbines, and solar energy systems. You get 30% of the cost for both labor and materials with no upper limit. This is quite an incentive when considering the installation of a solar system. The credit applies to both Solar P.V. and to Solar Thermal (hot water). The wording of the tax credit says “Solar Energy Systems” which leaves some doors open. It is my understanding that any piece of equipment that is powered or operated by the sun would qualify for the tax credit.

     This would mean things like a solar powered entry gate and a solar powered attic fan would be eligible. And the biggest one I’ve run across is a solar powered skylight. This is a skylight that opens and is powered by an electric motor which gets its power from storage batteries charged by the sun via small solar panels mounted in the skylight framework. While this used to be an approved credit I would recommend you discuss this thoroughly with your tax adviser if the decision is based on the tax credit in any way. Some of the larger skylights and run into the $4k-$5k price range making for a sizable credit.

     Solar and other items qualifying for the credit must be installed at your principal residence or a second home, but rental homes do not qualify.

Another item eligible is a hydrogen fuel cell. This can get you a 30% credit with an upper limit of $500 per .5 KW of capacity. You can see the latest at www.energystar.gov/taxcredits. Check it out.