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 2012 and 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 2012 and 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, which was previously extended through 2016. 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.


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.