The home improvement tax credit was a deduction for American taxpayers who made energy-efficient improvements to their homes, established in 2009 as part of the American Recovery and Reinvestment Act. The credit expired in 2010/2011, but some states offered similar incentives.
A home improvement tax credit is a deduction that American taxpayers were allowed to take from federal tax returns. The home improvement tax credit had specific requirements, which were set by the Internal Revenue Service (IRS). In general, the tax credits are for making improvements to the home to make it more efficient and environmentally friendly. A home improvement tax credit reduces a taxpayer’s income, which in turn reduces their tax liability.
Since the home improvement tax credit was part of the American Recovery and Reinvestment Act (ARRA) of 2009, it gave consumers and even businesses an incentive to reduce the amount of energy used. The incentive was to reduce the tax liability of the consumer or business. The tax credit was established in 2009 and had a term of one year or when the money set aside as part of the law ran out.
In addition to federal home improvement credits, some states have offered similar incentives to residents. State incentives included tax credits on state tax returns. Some also extended the incentives for both a federal tax credit and a state tax credit.
Making a home more energy efficient is one way federal taxpayers were able to take advantage of the tax credit. Improving energy efficiency could be as simple as replacing old appliances with Energy Star-qualified appliances that use less electricity and water. In 2009, homeowners were able to get up to a $1,500 US dollar (USD) home improvement tax credit on their federal tax returns.
Other ways to add energy-efficient home improvements that qualify for the tax credit include installing energy-efficient windows. Installing an energy-efficient heating and cooling system in your home also qualified for a home improvement tax credit, as did installing alternative energy sources.
Alternative energy sources include solar panels to heat and cool the home. Solar or wind power equipment as a source of electricity is another home improvement option that qualifies for a tax credit. From energy efficient appliances to water heaters to renewable energy sources, all of these home improvements paid off when it came time to file federal tax returns.
As of 2010 and 2011, there is no home improvement tax credit. While there is currently no home improvement tax credit or incentive, this does not mean that the federal government or even state and local governments will not provide incentives in the future.
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