The American Taxpayer Relief Act of 2012 (2012 Taxpayer Relief Act) provides benefits to homeowners like you by extending the Credit for Nonbusiness Energy Property (CNEP) for 2013. The 2012 Taxpayer Relief Act does not modify the general requirements for the CNEP.
As you may know, the CNEP can be taken when qualified energy efficient improvements or expenditures are made for your principal residence, including new insulation; replacement windows, skylights and doors; central air conditioners; certain water heaters, furnaces or boilers; and a new metal or asphalt roof specifically treated to reduce heat loss. The CNEP, which was not available for the 2008 tax year, is extended for eligible property placed in service after December 31, 2011, and before January 1, 2014. In order to qualify for the CNEP, there must be a reasonable expectation that the qualified energy efficiency improvements will remain in use for at least five years.
For 2013, the CNEP is equal to ten percent of qualified energy efficiency improvements installed plus qualified residential energy property expenditures. The maximum CNEP is equal to $500 after reduction by CNEP credits previously allowed after 2005.
The CNEP is often confused with the Residential Energy Efficient Property (REEP) credit. Both are energy credits available to homeowners; however, the REEP credit involves expenditures for solar electric property; solar water heating property; fuel cell power plants; small wind energy property; and geothermal heat pump property. This tax credit is 30% of the cost of alternative energy equipment that you installed on or in your home. Qualified equipment includes solar water heaters, solar electric equipment and wind turbines. If your REEP credit is more than the tax you owe, you can carry forward the unused portion of this credit to next year’s tax return. This REEP credit is available through 2016.
Please do not hesitate to contact us should you have any questions regarding the residential energy credit or any other provision from the 2012 American Taxpayer Relief Act.
Newburg & Company, LLP