As more property owners become more eco-conscious, they now have a way of recovering a part of their green investment through a renewable energy tax credit program. Aside from doing their share to reduce their residential carbon footprint, they earn credits and generate savings by purchasing low consumption appliances, installing renewable energy systems, and investing in other energy-efficient improvements to their property.
Instituted by the Energy Policy Act of 2005, the renewable energy credit program includes two options: the non-business energy property credit and the residential energy efficient property credit. These programs encourage homeowners to invest more in eco-friendly systems, such as a solar power generation setup or an air conditioning system for efficient cooling.
Under the non-business energy property credit program, homeowners can claim up to 10 percent of the cost of purchasing a qualified system or equipment. Another option is to get credit based on the type of system installed in the property. This other component has a lifetime cap of around $500. There are several types of improvements that qualify for credit. These include energy efficient heating, insulation, ventilation, and air conditioning or cooling systems. The program covers green investments made by a homeowner in their U.S based primary residence.
Appliances with an EnergyStar rating also qualify under the program. The EPA instituted the EnergyStar program to provide a standard for energy efficiency for products and appliances in the market. To claim for credit, the homeowner must have the product certification which guarantees compliance with the credit program requirements.
Under the residential energy efficient property credit program, homeowners can claim up to 30 percent for renewable energy systems installed last year. Photovoltaic or solar equipment for power generation and heating, as well as wind turbines, can be applied under the program. Solar systems must meet standard fire and electrical codes to qualify for credit.
Equipment installed in a property that is not the homeowner’s primary residence may also qualify for credit. The residential energy efficient property credit is available for both existing homes and homes under construction. When filing tax returns, homeowners must use IRS Form 5695 to claim under either program.
The implementation of the program presented greener options for residential owners and allowed them to choose how to reduce their power usage. On a bigger scale, the program also facilitated the growth of the renewable energy industry across the nation. With the program granted a multi-year extension in 2015, more property owners will be able to benefit in the coming years. According to the Solar Energy Industries Association, the more than 200,000 residential and commercial property owners with their own solar systems is expected to double by the end of 2020. In total, solar investments are also projected to reach almost 100GW during the same period, a huge leap from the 27GW figures of 2015.