Are you considering replacing windows in your home? Have you ever wondered if the windows you choose might be tax deductible? The good news is that replacement windows are, in fact, tax deductible. In order to qualify for a tax deduction from the IRS, windows must meet special criteria established by ENERGY STAR® and the Environmental Protection Agency (EPA). Read on to learn more about the requirements for windows to be eligible for a tax deduction.
What are ENERGY STAR®-rated windows?
ENERGY STAR® is a government-sponsored program that helps businesses and consumers save money and protect the environment by identifying energy-efficient products. Products that have earned the ENERGY STAR label are independently certified to meet strict energy efficiency criteria set by the US Environmental Protection Agency.
In order to be eligible for the ENERGY STAR label, windows must meet certain criteria for air leakage, U-factor, and Solar Heat Gain Coefficient (SHGC). The U-factor measures how well a product prevents heat from escaping; the lower the U-factor, the better the window is at insulating. The SHGC measures how well a product blocks heat from the sun; again, the lower the number, the better.
Eligibility Criteria for Tax Deduction
ENERGY STAR® and EPA requirements
In order to be eligible for a tax deduction, windows must meet the requirements established by ENERGY STAR® – the international standard for energy efficient consumer products. There are three prongs needed to meet this standard. The windows must be manufactured by an ENERGY STAR® partner and meet the strict energy efficiency guidelines outlined by the Environmental Protection Agency (EPA). Finally, they must be tested and certified by the National Fenestration Rating Council (NFRC). Once a window or skylight has met these standards, it becomes ENERGY STAR® rated.
After receiving an ENERGY STAR® rating, there are two major criteria that your windows must meet in order to be eligible for a tax deduction from the IRS. The windows must be installed at your primary residence and installed within the given timeframe outlined by the IRS. For example, taxpayers were eligible for up to $500 in tax deductions over a four-year period from 2012 through 2015.
Benefits of Installing ENERGY STAR®-rated Windows
Installing ENERGY STAR®-rated windows comes with a number of benefits. In addition to saving you money on your energy bills, they can also make your home more comfortable by reducing drafts and hot spots. They can also reduce noise pollution from outside and protect your furniture and carpets from fading due to sunlight exposure. And of course, they’ll help you qualify for that all-important tax deduction!
Guidelines for Taking a Tax Deduction
In order to take a tax deduction for your ENERGY STAR®-rated windows, you’ll need to file Form 5695 with your taxes. This form allows you to claim the credit for “Residential Energy Property.” The credit is worth 10% of the cost of eligible property, up to $200 for windows or skylights and $500 for biomass stoves. If you’re unsure whether your particular windows qualify, you can check here.
Once you’ve filed Form 5695 with your taxes, hang on to any receipts or other documentation that verifies the cost of your windows; you may need it if audited by the IRS. And that’s it! By following these simple steps, you can enjoy all the benefits of energy-efficient windows while also getting a little something back come tax time.
All in all, updating your windows is a great way to not only improve the look of your home but also make it more energy-efficient. And thanks to the Residential Energy Property Credit, you can get up to $200 back on your taxes when you install ENERGY STAR®-rated windows. So if you’re thinking about updating your windows, be sure to keep these guidelines in mind—it could end up saving you some serious cash! If you have any questions or would like more information, please don’t hesitate to contact us. We’d be more than happy to help you out!