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Energy Credits for 2006 & 2007
Energy-efficient home improvements
This credit will be available for property placed in service after December 31, 2005 and before January 1, 2008. The tax credit cannot exceed $500
and is available to individuals for nonbusiness energy property, such as residential exterior doors and windows, insulation, heat pumps, furnaces,
central air conditioners and water heaters.
• Insulation materials;
• Exterior windows, including skylights;
• Exterior doors;
• Metal roofs with special pigmented coatings;
• Electric heat pump water heaters;
• Electric and geothermal heat pumps;
• Central air conditioners;
• Natural gas, propane, or oil water heaters or furnaces;
• Hot water boilers; and
• Advanced main air circulating fans.
The residential energy property credit is a $500 lifetime credit. The credit is equal to 10 percent of the cost of qualified energy efficiency
improvements (windows, doors, insulation) plus the cost of qualified energy property (heat pumps, water heaters, furnaces, central air units)
up to the $500 lifetime maximum, subject to the following specific credit amount limits:
1) $200 for window components
2) $50 for an advanced main air circulating fan
3) $150 for any qualified natural gas, propane, or oil furnace or hot water boiler, and
4) $300 for any item of energy-efficient building property.
The energy-efficient property must be expected to remain in use for at least five years. The nonrefundable credit reduces the basis of the property and unused credits
cannot be carried forward. The credit is not available for vacation homes or residential rental property.
Credit for solar and fuel cell equipment installed on a personal residence
A tax credit is available to help individual taxpayers pay for residential alternative energy equipment.
The residential alternative energy credit is 30 percent of the cost of eligible solar water heaters, solar electricity equipment (photovoltaics) and fuel cell plants.
The maximum credit is $2,000 per tax year for each category of solar equipment, and $500 for each half kilowatt of capacity of fuel cell plants installed per
tax year. Cooperative and condominium dwellers can claim the credit by splitting the cost of installing equipment with other unit owners. Eligible equipment
must be placed in service after December 31, 2005, and before January 1, 2008.
The residential alternative energy credit is a nonrefundable personal credit. It can be used to offset the excess of the individual’s regular tax liability over any
AMT liability, but cannot be used to get a refund if the tax liability drops below zero. Unused credits may be carried forward and added to a residential
alternative energy credit for the succeeding tax year.
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