Tax Write-Offs for Insulating Your House

When you're taking care of your finances, you want to get the most you can out of every dollar. This includes taking a close look at any renovations you make to your home and seeing if they may be eligible for tax write-offs. Insulating your home is one renovation that can save you money through both reduced taxes and reduced energy bills.

Consumer Energy Efficiency

You can get a tax credit from the federal government by qualifying for an Energy Star Consumer Energy Efficiency credit. This credit will cover 10 percent of the cost of adding insulation to your home, up to $500 total. To qualify for this credit, the insulation must have been installed in 2012 or 2013. If a purchase was made in 2009 or 2010, and the tax credit hasn't been taken yet, the maximum for those years is $1,500 total.

Qualifying Insulation

The federal Consumer Energy Efficiency tax credit can be applied to a wide range of house insulation products, such as pour-in-place, rolls, blow-in fibers and boards. The key is that it must be installed in a home that you use as your primary residence. The tax credit also covers insulation that reduces air leaks, if it has a Manufacturers Certification Statement. Types of air leak insulation that qualify include canned spray foam, caulk, house wrap and weather stripping.

Federal Application

To take advantage of this federal tax credit, you must file IRS Form 5695, "Residential Energy Credits," for the relevant tax year. After filling out the form and determining how much you qualify for, enter this amount on your IRS Form 1040's line 52. Both forms should be submitted by the return deadline. Be sure and keep all your receipts from your purchases, installation costs and Manufacturers Certification Statements in case the IRS requests proof of your improvements.

State Credits

Your insulation might also qualify for tax credit, rebates, loans and other awards under state and local tax laws. Check with a tax adviser or financial consultant for specific details in your area. For example, the city of Plano, Texas, offers smart-energy loans for people installing installation in their residence. North and Central Texas offer region-wide rebate programs for insulation added to residential buildings. Montana gives a tax credit up to 25 percent of the cost of installing residential energy-efficient insulation, with a $500 cap. Kentucky gives a 30 percent tax credit on insulation installation costs, with a $500 cap.

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About the Author

With features published by media such as Business Week and Fox News, Stephanie Dube Dwilson is an accomplished writer with a law degree and a master's in science and technology journalism. She has written for law firms, public relations and marketing agencies, science and technology websites, and business magazines.

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