<aside> đź’ˇ What: The federal government offers tax credits to homeowners that invest in their homes to make them more energy efficient.
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<aside> đź’¸ How to claim: You claim this credit using Form 5695 on your personal tax filing. The credit is non-refundable, and any unused credit can be carried forward to future tax years.
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The credit only applies to eligible purchases made for your “main home”. The IRS offers the following guidance on how to define “main home”: Your main home is generally the home where you live most of the time. A temporary absence due to special circumstances, such as illness, education, business, military service, or vacation, won't change your main home.
Purchases of the following may qualify for the credit:
| Item | Amount of Credit |
|---|---|
| Air Source Heat Pump | $2,000 |
| Central Air Conditioning | $600 |
| Hot Water Boiler | $600 |
| Gas, Propane, or Oil Furnace | $600 |
| Water Heater | $600-$2,000 |
| Insulation | 30% of your material cost, up to $1,200 |
| Windows, Doors, Skylights | 30% of your cost |
| *Windows are capped at $600. | |
| Doors capped at $250 each, $500 total.* |
If you purchased an Energy STAR certified item, it likely qualifies. However, the Castle team can check the specific SKU you purchased and confirm its eligibility. You can email the product info sheet or SKU to [email protected] for more information.
This credit is capped at $1,200 per household per year, with an additional $2,000 available for heat-pumps/heat-pump powered water heaters.
To claim the credit, you need to complete Form 5695. If you use a tax preparer, they’ll need to include this with your final personal tax filing (Form 1040). The most important part of the form to understand is Part 2, which focuses on home improvement credits.
If you use a tool like TurboTax to complete your taxes, you’ll be able to complete questions related to the Federal Residential Energy Credit to ensure the credit is applied. Make sure a Form 5695 is included with your final filing package before submitting.
(Note: Claiming this credit will mean you’re not filing a “simple” return, meaning most tax prep softwares will not allow you to file using their free offering.)
About Form 5695