Form 5695

Form 5695, Residential Energy Credits, is the tax form to claim the energy-efficient property tax credits. When you install energy-efficient equipment on your property, you get a tax credit equal to a portion of your expenses. With Form 5695, there are two credits you can claim. These are non-business energy property tax credit and residential energy-efficient property tax credit.

Filling out Form 5695 for the energy credits

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Fill out Form 5695 for both the non-business energy property tax credit and residential energy-efficient property tax credit. Then, attach it to your federal income tax return.

Non-Business Energy Property Tax Credit

The non-business energy property tax credit equals 10 percent of the costs of installing this equipment. The non-business energy property credit has been extended through December 31, 2021, and you can claim this for the cost of installing energy-efficient water heating and stoves that run on biomass fuel, and heating and air conditioning systems. The credit also enables taxpayers to claim 10 percent of the cost of energy-efficient windows, doors, skylights, and certain roofs for insulating your home for the winter and summer. 

Residential energy-efficient property credit

While the non-business energy property tax credit grants you 10 percent of the cost of the installment of energy-efficient materials and items to your household, you get 30 percent with the residential energy-efficient property credit. This credit covers installing solar electric panels, wind turbines, fuel cell properties, geothermal heat pumps, and more. 

Differences between the tax credits

Although these credits are claimed using a single tax form, there are a few other differences than how the credit is calculated. While the non-business energy property tax credit has an upper limit, the residential energy-efficient property tax credit doesn’t have any.

In addition to this, the residential energy credit can be claimed for any of your homes. Whether it’s your primary residence or secondary home, you can benefit from this tax credit. However, you must make these installments and improvements to your primary residence to claim the non-business energy property tax credit. 

For tax purposes, your primary residence is where you live more than half the year. If you have more than one home, the one that you spend the majority of your time on during the tax year is considered your primary residence.