The good news is that there are tax credits for new and replacement windows available for homeowners. Nothing could be better than getting new windows and a tax credit at the same time. Below explains what type of tax credits is available.
Why Replace Residential Windows?
Homeowners can reduce their energy costs through upgrading their windows to energy-efficient models. New windows directly results in lower heating and cooling costs. As part of the replacement process, homeowners can also add caulking and weather stripping, which will reduce air leakage and improve energy efficiency. Energy efficient windows share similar characteristics. For instance, the windows will feature double panes of glass filled with gas, such as argon or krypton that insulate better than air. Low-e glass coatings will reflect infrared light and keep heat inside. Warm edge spacers help to insulate the pan edges and reduce heat transfer. Finally, framing materials are made of fiberglass, vinyl, wood or combinations that utilize foam filled frames.
Federal Tax Credits
According to the EPA’s Energy Star program, tax credits are available for Energy Star certified windows that were installed between 2012 and 2014. In fact, they also offer tax credits for Energy Star doors and skylights. The tax credit may equal 10 percent of the product cost up to $200 for qualified windows. However, this does not include installation costs.
IRS Tax Credit Rules for Home Efficiency Improvements
The IRS offers tax credits for qualifying energy-efficient home improvements. In accordance with the EPA’s Energy Star program, the IRS offers non-business energy property credits. While the IRS has limited the tax credit for windows at $200, they also include insulation. Therefore, anyone performs major home renovations and replaces the insulation near windows may qualify for additional tax credits. There is a lifetime credit limit of $500. Homeowners must have written proof from the manufacturer that the product specifically qualifies for the energy efficiency tax credit. This information should not be submitted with the tax return, but kept with tax records. Taxpayers should claim these credits through the Residential Energy Credits Form 5695.
Which Law Created Tax Credits for New and Replacement Windows?
The comprehensive the American Recovery and Reinvestment Act (ARRA) of 2009 included legislation for energy efficiency. Specifically, section 1121, Residential Energy Property Credit, raised the energy tax credit for homeowners by 30 percent. Despite the fact that section 1121 expired in 2010, it was extended through the American Taxpayer Relief Act of 2012 until the end of 2013.
What Other Savings are Available?
The Department of Energy offers a handy search tool to locate tax credits and rebates that are offered by state agencies and local utility companies. There are hundreds of eligible savings opportunities for homeowners who upgrade their residential windows. For example, the federally owned Tennessee Valley Authority (TVA) offers incentives through their In-Home Energy Evaluation Program. Eligible homeowners will be reimbursed for window replacements and added storm windows. Alternatively, the Idaho Tax Commission offers a 100 percent tax deduction for energy efficient window improvements which were installed before 2002. Progress Energy Florida offers a home audit and rebate program that offers replacement window rebates.
In short, replacing your home windows is a great way to save money and natural resources. There are private, state and federal tax credits for new and replacement windows available.
Related Resource: When to Reglaze a Window
