Residential Energy Efficient Property Credit Reinstated for Tax Year 2008

This tax credit had expired on December 31, 2007. However, under the Tax Extenders and Alternative Minimum Tax Relief Act of 2008, it is reinstated for eight years, through 2016.

Individuals are allowed a residential energy efficient property credit for expenditures for qualified solar electric property, qualified solar water heating property, and qualified fuel cell property.

Additional changes to the credit:

• The maximum credit for solar water heating property expenditures increase from $2,000 to $4,000;

• The credit includes expenditures for residential wind property and geothermal heat pumps; and

• The credit is allowed to be claimed against Alternative Minimum Tax (AMT).

Solar Electric Property - Under prior law, taxpayers were allowed a credit equal to 30% of the expenditures incurred for solar electric property installed in their residence. The credit was limited to $2,000. Beginning in 2009, the $2,000 credit limit no longer applies. This means the credit is 30% of the total cost. This change does NOT apply to tax year 2008!

For more information on the residential energy efficient property credit, see the Energy Incentives Act of 2005.

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