Since you cannot avoid taxes, you’re probably trying to figure out how you can save on them. Make them a little less painful. If you had some significant home improvements in the last year, you might also be wondering if your new windows are tax-deductible.
The answer is – maybe. It’s complicated, but hopefully, we’ll shed some light on the subject for you. But first, let’s get a quick disclaimer out of the way.
Disclaimer: always talk to a tax professional.
Before we get started, it’s important to mention that talking to a tax professional is the best way to determine whether or not the installation of new windows is tax-deductible. We are not tax professionals, and everything we discuss is for informational purposes only. Everyone’s situation is different, so seek advice from a qualified pro.
We have anecdotal information from installing windows throughout San Antonio and Corpus Christi for the last 20 years, but the truth is that the tax code is constantly changing. That means there are different requirements for tax deductions every year. There are differing requirements at the state and local levels as well.
To get the most out of your upgrade, talk to a tax pro before purchasing to see where you can get the most bang for your buck.
Energy-star is the key to these deductions.
Will installing new windows in your home be tax deductible? As with anything related to taxes, it depends.
For windows to qualify for a deduction, they must be Energy-Star rated. Sure, they can be of almost any window type, such as casement, bay, single-hung, double-hung, etc. But no matter what kind of window you install, be sure that it is Energy-Star rated.
They must also be installed on your primary residence. So upgrading the windows on your vacation home won’t do you any favors regarding taxes. However, there are other benefits.
It’s worth noting that Energy-Star rated windows won’t just hit your pocketbook at tax time. Windows with this rating are designed to save energy. They have been designed and tested to keep your home at a consistent temperature resulting in your HVAC unit working as hard to maintain a comfortable temperature. So you save all year round on your energy bills.
Do I need to replace all windows to qualify for the tax deduction?
Nope, you can replace one, just a few, or all of them. There is no minimum requirement, but there is a cap on how much you can claim. We’ll talk more about that later.
Let’s say you take a baseball through a window. Your windows are older, so you wanted to upgrade anyway, but you’re going to start with that one window.
You can still get a deduction for that single window. As you continue to replace windows throughout your residence, you can get the deduction each time, up to a point.
How much can I claim?
Up through the tax year 2021, you can claim up to 10% of the cost of the eligible upgrade with a cap of $500.
So, for example, if you spend $1,000 on a pair of Energy-Star rated windows, you can get a credit for $100. However, if you outfit your entire home with new windows and it costs $20,000, 10% would be $2,000, but you’re capped at $500.
These limits are per year, of course. So if you max out your credit with new windows in December and decide to go with a new qualifying HVAC unit in January, you can get the credit twice – just in two different years.
Claiming other home improvements.
We could not possibly go on about everything you can deduct or get credit for. However, since we’re talking about energy efficiency and home improvements, there are some other things you can deduct from your taxes.
- Windows, doors, and skylights.
- Roofing.
- HVAC units (heating and air conditioning).
- Water heaters.
- Insulation.
Of course, these items will have to meet specific requirements to qualify.
Windows are an expensive endeavor, but they’re entirely worth it. They make your home look and feel beautiful. However, if you plan out the project carefully and seek guidance from a CPA, you can save a little bit in the long run.
If you consider upgrading your windows, I won’t drag your feet. These incentives gradually diminish over time, so they might not be available if you wait too long.