If you have been on the fence about replacing the windows and doors in your San Diego home, and you can’t decide if you should do it now or wait until next year, we wanted to let you know about an incentive that might help you with your decision. The federal government is currently offering a tax credit for qualified residential energy efficiency improvements, including energy-efficient windows and doors—but not for much longer!
The residential energy credit gives homeowners a 10% tax credit on the cost of replacement window and door products: up to $200 for windows and $500 for doors, but only if they are installed in your principal residence before January 1st, 2017. The products must be ENERGY STAR certified, and they don’t necessarily have to be replacement products. For example, if you are building an addition on your San Diego home, and you install ENERGY STAR windows, they qualified for the tax credit. The credit cannot, however, be claimed for window or door products installed in a newly constructed home.
All of the replacement window and door products sold by BM Windows meet or exceed the ENERGY STAR program requirements, which means they:
- Are made by an ENERGY STAR partner
- Have been tested and certified by the National Fenestration Rating Council (NFRC)
- Have received ratings from the NFRC that meet or exceed the stringent energy efficiency guidelines established by the Environmental Protection Agency (EPA)
In San Diego, in order for replacement windows and patio doors to qualify for the tax credit, the window or glass door must have a U-Factor of .30 or less and a Solar Heat Gain Coefficient (SHGC) of .25 or less. The U-Factor number indicates how well a window or door product keeps heat from escaping the home, and the SHGC number measures how much heat from the outdoors is kept from entering the home. These numbers are readily available on any replacement window and door products with an ENERGY STAR label.
Limits to the Tax Credit for Replacement Windows and Doors
The total maximum tax credit amount you can claim for installing energy efficient windows and doors in your home is $500. You cannot claim $200 for windows and $500 for doors. The credit amount is based on the cost of the products themselves and does not include installation costs.
If you have previously claimed the maximum tax credit for replacing or installing energy-efficient windows and doors between the years 2006 and 2015, you cannot claim it again. So, for example, if you installed new patio doors in 2014, and claimed the $500 tax credit, and then replaced your windows this year, you cannot claim an additional $200. But, if a previous rebate did not meet the maximum amount (say, you only received a $100 tax credit for replacing a few windows last year), you can claim an additional credit this year, up to the maximum amount allowed.
Also, please note that the tax credit is considered a “nonrefundable” personal tax credit, meaning it can only be used to decrease or eliminate a tax liability. You cannot receive a tax refund or carry forward the credit into a later year.
How to Claim the Credit for Installing Energy-Efficient Windows and Doors
When it’s time to file your federal taxes early next year, you (or your tax preparer) will need to fill out Form 5695 and attach it to Form 1040 or 1040NR. Make sure you keep the receipt from your replacement window or door purchase with your tax documents
If you want to take advantage of this tax credit that is expiring at the end of the year, don’t wait too much longer! Remember, the windows and doors need to be installed by December 31st, 2016, and there can be several weeks between the time you order your windows and the time they are actually installed, so don’t delay!
Contact BM Windows today, so we can set up you free, in-home consultation, and get you started in the process of purchasing your new replacement windows and doors.
The information in this article is not to be construed as legal or accounting advice. Please consult with an accountant or other tax professional regarding the details of the tax credit and how it pertains to your specific situation.