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US homeowners can receive a tax credit of up to 30% of insulation costs, with a maximum of $1,500, for adding insulation to their homes to improve energy efficiency. The added insulation must meet certain industry specifications and homeowners must provide receipts and certification documents with their tax returns. The credit does not include installation costs and only applies to insulation installed in the building envelope.
In the United States, an insulation tax credit is a tax benefit for homeowners who add additional insulation to their homes as a way to improve energy efficiency. The most recent US tax laws as of 2011 allow homeowners to deduct up to 30 percent of insulation costs, with a maximum amount of $1,500 United States Dollars (USD) from their annual taxes. The added insulation must meet certain industry specifications, depending on the area of the country in which a person lives. For the insulation tax credit to apply, homeowners must provide a receipt for the insulation purchased, as well as a manufacturer’s certification document with their tax returns.
Many of the recent economic initiatives around the world are based on efforts to increase energy efficiency, thereby reducing the need for countries to pay large amounts to foreign energy sources. The United States has instituted many such initiatives, including passing a 2005 law that allows homeowners to be rewarded for such energy-saving efforts. This law, which was strengthened to higher levels in 2009, allows homeowners to benefit from an insulation tax credit.
The most recent insulation tax credit levels as of 2011 allowed by the US Internal Revenue Service are 30 percent of insulation improvements up to a one-year total of $1,500 USD. For example, if a homeowner adds $2,000 of insulation to her home, he could deduct 30 percent of that amount, or $600, from her tax return for that year. This essentially rewards the homeowner for improving energy efficiency, which should also save you money down the road.
It is important to note that the insulation tax credit does not include any work performed by contractors hired by the owner to install the insulation. Since this is the case, homeowners should receive an itemized list from the contractor specifying the exact cost of insulation separate from installation costs. These costs must be provided on a tax return as well as a manufacturer’s certification document validating the insulation to authorize credit.
Homeowners should consult with tax professionals to find out exactly what type of insulation must be installed to qualify for the insulation tax credit. Insulation levels are measured by an industry standard known as the R-value. Different sections of the country require different R-values depending on which parts of the home are insulated. It’s also important to know that the credit applies only to insulation installed in the building envelope, which is defined as the part of the home that separates the living space from the space outside the home.
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