imageThe use of renewable energy has been on the rise in the past few years because of its huge benefits when it comes to saving energy as well as its incredible efficiency. Additionally, those using renewable energy in their homes or businesses are offered incentives by the government as a way of encouraging more use of this energy.

Incentives given to persons using renewable energy or persons improving energy efficiency in their residential places are called Residential Renewable Energy Tax Credits. This tax credit is used to offset some of the costs involved in using renewable energy, such as those incurred in running the equipment used as well as the initial installation fees.

 

Which Equipment qualifies for the Residential Renewable energy Tax Credit?

Not all renewable energies qualify for this tax credit. Those that qualify include;

Solar Panels – The solar panels that qualify are those only used at home.
Wind turbines – The turbines are restricted to 100 kilowatts. This is because those that qualify should only supply energy to residential places. Therefore, more kilowatts cannot qualify even if they are used for residential purposes.
Water heaters that are powered by solar heaters – These also only qualifies if it is for residential use. Half of the water heated at home must be heated by use of solar panels and not any other source of energy. However, this does not apply for swimming pools or hot tubs heated by solar panels.
Petroleum cells relying on energy that is renewable also qualify for the residential renewable energy tax credits. However, they are restricted to 0.5 kilowatts.
Geothermal pumps that are up to standard with the guidelines of federal energy.

 
How does the Residential Renewable Energy Tax Credit work?

In regards to the U.S energy regulators, one can qualify for the tax credits even when one has more than one residential place. However, the petroleum cell equipment can only qualify for the tax credit in only one of the homes and in most cases only the foremost home.

The tax credit is usually 30% of the cost of the renewable energy equipment inclusive of the installation cost. In most of the equipment, there is no limit as to what credit one is given. However for fuel cells, there is an upper limit of $500 per half kilowatt.

 

What is the history of Residential Renewable Energy Tax Credit?

The federal tax credit for renewable energy equipment for residential use was established in the year 2005. The tax credit by 2005 only applied to taxpayers using solar panels, solar heated water systems and petroleum cells. However this was reviewed in 2008 by the federal government to include wind turbines and geothermal pumps. Other reviews done in the year 2009 include removing the $200 tax credit limit for solar panels after which another review was done to remove any limits on all equipment qualifying for residential renewable energy tax credit. This is in exception of fuel cells which still have an upper limit of $500 for each half kilowatt generated or used.

Therefore, using renewable energy especially at homes is the way to go in the future. You not only have a clean source of energy, but also reliable, efficient, and low-cost energy that qualifies you for tax credit.