Energy Credits Reinstated for 2012

Tax credits for various energy improvements to existing homes as well as new homes that were previously allowed for purchases through December 31, 2011 have been retroactively extended. The credits were unavailable for purchases after December 31, 2011 until the 2012 Taxpayer Relief Act was passed in early 2013. The act extends the credits to property purchased after December 31, 2011 and before January 1, 2014. Common credits that can be taken in 2012 or 2013 are as follows:

1. Non-business Energy Property Credit. Taxpayers can claim a credit up to 10% of the cost of a) qualified energy efficiency improvements, and b) residential energy property expenditures. The credit has a lifetime limit of $500 ($200 for windows and skylights) through 2013.

2. Qualified Alternative Fuel Vehicle Refueling Property Credit. For property used in a trade or business, a taxpayer can claim up to a 30% of the cost of installing qualified alternative vehicle fueling property. The credit is limited to $30,000 per year per location. For property used at the individual's principal residence, the credit cannot exceed $1,000.

3. New Energy Efficient Home Credit. New homes that are either acquired or constructed by an eligible contractor and acquired by a taxpayer before January 1, 2014 can qualify for a credit of $2,000 or $1,000 for each new home if energy efficient standards are met.

Taxpayers should make sure that any improvements made meet energy efficient specifications, which should be available from the manufacturers.