The federal tax credit for residential property was established by the Energy Policy Act of 2005 and originally allowed for credits of 30% for expenditures related to installing solar electricity, water heating systems and fuel cells, notes the U.S. Department of Energy. There have been several amendments to the act, and it is set to expire on Dec. 31, 2016.Continue Reading
The Energy Improvement and Extension Act of 2008 added small wind energy and geothermal heat pumps to the list of residential installations covered by the Energy Policy Act, states the U.S. Department of Energy. Congress removed the maximum allowable credit for all installations, other than fuel cells, placed into service after 2008 with The American Recovery and Reinvestment Act of 2009. People claiming the tax credits must own and use the residences in which eligible systems are in place, and they can use the credits for labor costs, assembly, installation, piping and wiring to residences.
To take tax credits for solar-electric properties, people must own them but do not have to make them their primary residences, notes the U.S. Department of Energy. Solar water heating systems must be certified by the Solar Rating Certification Corporation in order to qualify for tax credits, and geothermal heat pumps must meet Energy Star requirements. The maximum credit for fuel cells properties is $500 per half kilowatt, as of 2015, and the system must exist in the taxpayer's primary residence.Learn more about Taxes