Do Skylights Qualify for Tax Credits?

In today’s eco-conscious world, homeowners are increasingly looking for ways to make their homes more energy-efficient. Not only does this help the environment, but it can also lead to significant financial savings. One such avenue of savings comes in the form of federal tax credits for energy-efficient home improvements. While solar panels and energy-efficient appliances often come to mind, there’s another option that many overlook: skylights. Specifically, solar-powered skylights can offer not just natural light and ventilation but also a valuable tax credit. In this article, we’ll delve into the details of how skylights, particularly those that are solar-powered, qualify for federal tax credits.

What is a Tax Credit?

A tax credit is a financial incentive offered by the government to encourage certain behaviors, such as investing in energy-efficient technologies. Unlike tax deductions, which reduce your taxable income, or tax exemptions, which remove certain items from taxation altogether, a tax credit directly reduces the amount of tax you owe. In simpler terms, a tax credit is like receiving a discount on your tax bill. For taxpayers, this means more money in your pocket at the end of the year when you file your tax return.

The Federal Tax Credit for Skylights

The federal government offers a tax credit specifically designed to incentivize homeowners to invest in energy-efficient improvements. One of these is the installation of solar-powered skylights. This credit is part of a broader initiative to promote renewable technologies such as solar electric property. By installing qualifying skylights, you can claim a 30% tax credit on both the purchase and installation costs. This is a substantial financial benefit that makes the decision to go solar even more appealing. Moreover, the tax credit has been extended to 2032, giving homeowners ample time to make these valuable upgrades.

How Skylights Qualify for Federal Solar Tax Credits

To take advantage of the federal tax credit for skylights, there are specific criteria that must be met. First and foremost, the skylight must be solar-powered to qualify. Additionally, the product and its installation must come with a certification statement to prove its energy efficiency. This statement is crucial when filling out IRS Tax Form 5695, which is the form used to claim the Residential Energy Efficient Property Credit. Homeowners are advised to consult their tax professional to ensure all requirements are met and to keep this certification as part of their tax records for future reference.

VELUX Products and Tax Credit Eligibility

When it comes to skylights that qualify for the federal tax credit, VELUX stands out as a leading brand. VELUX offers a range of products that are not only solar-powered but also come with a certification statement to confirm their energy efficiency. Homeowners simply need to attach this certification statement to their tax return with receipts to qualify.

Among the qualifying products are solar-powered “fresh air” skylights, fixed or manual fresh air skylights with factory installed solar powered shades, and rigid Sun Tunnel skylights with a pre-installed solar-powered night light. The Velux solar powered models provide maximum versatility as they not only bring natural light into your home but also offer the option of ventilation. Especially useful in bathrooms and kitchens, these skylights are powered by a small solar panel mounted on the exterior frame, which charges an internal battery, allowing remote control operation.

How Much Can You Save?

The financial benefits of installing a VELUX solar-powered skylight can be substantial, thanks to the federal tax credit. For example, the estimated tax credit on the product and installation of a single VELUX No Leak Solar Powered “Fresh Air” skylight could be around $840. This can reduce the typical installation cost from $2,800 to approximately $1,960. It’s important to note that these costs can vary by location and the actual installation costs will differ. Nevertheless, the tax credit significantly reduces the total price paid for both the purchase and installation of qualifying products, making it a financially savvy choice for homeowners.

How to Claim the Tax Credit

The ability to obtain tax credits for your skylight installation involves a few important steps. First, ensure that you retain all receipts and certification statements related to the product and its installation. These documents will be crucial when filling out IRS Tax Form 5695, the form designated for claiming the Residential Energy Efficient Property Credit. Once you’ve gathered all necessary documents, you’ll need to fill out the form and attach it to your completed tax return. While the process may seem straightforward, it’s advised to consult a tax professional to ensure that you’ve met all requirements and to keep these documents as part of your tax records for future reference.

Additional Benefits of Solar Powered Skylights

Beyond the financial incentives offered by the federal tax credit, solar powered skylights come with a host of other benefits. These skylights are equipped with a small solar panel that charges an internal battery, allowing for remote control operation. This feature is particularly useful in bathrooms and kitchens where ventilation is often needed. Moreover, many models come with a rain sensor that automatically closes the skylight when rain is detected, adding an extra layer of convenience. Solar-powered skylights also contribute to home energy efficiency by reducing the need for artificial lighting and air conditioning, thus saving energy in the long run.

Conclusion

Installing solar-powered skylights in your home offers a win-win situation. Not only do you get to enjoy natural light and improved ventilation, but you also stand to gain a significant financial benefit through the federal tax credit. With the credit extended until 2032, now is an excellent time to consider making this valuable home improvement. By choosing qualifying products and following the necessary steps to claim your credit, you can brighten your home while lightening the load on your wallet.