Tax Form 5695 – Residential Energy Credits - How To Fill Out Form 5695
While switching to solar energy in your home will save you money long term, the initial investment can be sizable.
Lifestyle Solar has leasing and purchasing plans to help soften the blow, but there’s help from the government too.
In an effort to reward those who make the wise choice to utilize natural energy, and help save the environment in the process, the US government has a tax rebate scheme that allows you to recover some of the costs incurred when purchasing your solar energy system. If you haven’t heard about these energy credits before, or are just a little confused as how they might apply to you, here is an overview of what you need to know.
There are separate considerations for business and residential credits, and here we will focus on the latter, which is covered by Form 5695. It’s important to note that if you wish to claim these credits you must fill out this form to be eligible along with submission of your 1040 and any other tax forms. Form 5695 is divided into two parts, the Nonbusiness Energy Property Credit and theResidential Energy Efficiency Property Credit.
Nonbusiness Energy Property Credit
Although this doesn’t directly apply to installing a solar energy system, it still could save you money if you are already in the process or have installed energy-efficient products for your home. You will receive 10% back on installation of things such as windows and doors that meet Energy Star specifications.
Other products eligible consist of furnaces, boilers, water heaters, pumps and air conditioners. Again, these must all meet certain guidelines for energy-efficiency in order to be claimed. The lifetime credit available for this section is limited to $500 lifetime. There are also limits for certain types of products such as a maximum credit of $200 for windows, and $300 for air-conditioners, for example.
Residential Energy Efficiency Property Credit
This section of the credit will be most applicable to those purchasing a solar energy unit from us. You can receive 30% of costs associated with installing an alternative energy source in your home.
Qualifying items include:
- Solar panels and heaters
- Wind turbines
- Heat pumps
- Fuel cells
Not only is the physical equipment cost included in the 30% but also labor for installation with no cap for residential systems. Also the home does not have to be your main home to qualify except in the case of fuel cells. Note that if your state offers a rebate for installation of solar panels, the 30% rebate will be calculated after that rebate is applied.
Solar Energy Doesn’t Have to be Costly
By taking advantage of this rebate setup by the government, you can help mitigate the initial large costs of installation substantially.
And, with $0 down payment, the amount you save can start from month 1.