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The Taxman is Coming. Don’t Forget Your Tax Credits

By Gates Dearen

With the holidays, Super Bowl and Valentine’s Day now behind us, one of the big blinking lights on everyone’s calendar is April 15th, income tax day. If you’ve not yet done so, it’s time to start
Tax Day Reminder
Tax Day Reminder (Photo credit: SalFalko)
gathering and organizing your W2s, 1099s, receipts, bank statements and other pertinent paperwork.  There is good news if you just purchased a home, took out a construction or home improvement loan, or if you just upgraded your home by replacing your old windows and doors with new, energy efficiency models.

But before you sit down to file your taxes online, or work with your accountant, remember that by owning a home, you may qualify for some of the above mentioned tax breaks. In order to reap, you must sow, which means you’re going to have to go through the process of itemizing your taxes to take advantages of the deductions. Potentially time consuming? Yes. A hassle? Perhaps, but once you’ve done it, the benefits are usually worth the time and effort – especially if you replaced your windows, skylights or exterior doors last year. You may be able to help pay for those upgrades by taking advantage of certain tax breaks. You should always seek the advice and counsel of qualified tax accountant or attorney before claiming any deduction.  Now that the disclaimer is out of the way, let’s look at ways you can save money.

Home Improvement Loan Interest 

You may be able to deduct the interest on a loan you’ve taken out to make improvements on yo
ur home. Qualifying loans are those taken out to add “capital improvements” to your home, which means the
 improvement must increase your home’s value, adapt it to new uses, or extend its life. Installing a new
carpet or painting the exterior isn’t considered capital improvements. However — and here’s the good news — installing new windows, skylights and doors are considered capital improvements.

Energy Efficiency
Energy Efficiency (Photo credit: London Permaculture)
Residential Energy Efficiency Tax Credits

The American Taxpayer Relief Act of 2012 retroactively renews the Residential Energy Efficiency Tax Credit of 2011. Homeowners can claim a credit of up to 10% or $200 of the purchase price of qualifying windows and 10% up to $500 for qualifying exterior doors. Installation costs are excluded. Windows, doors, and skylights that are eligible for a federal tax credit and must meet these strict criteria:
  1. Windows must be installed between January 1, 2012 and December 13, 2013.
  2. Products must be installed in the homeowner’s primary residence.
  3. Products must meet Energy Star published criteria for the Energy Star Climate Zone in which they are installed.
Furthermore, if you claimed an energy efficiency credit in a previous taxable year, please consult a tax professional or visit to determine if you’re still eligible. 

What Makes a Window, Skylight or Door Energy Star qualified?

These products are manufactured by an Energy Star partner, they’re independently tested and certified by the National Fenestration Rating Council (NFRC), and they meet stringent energy efficient guidelines as defined by the U.S. Department of Energy (DOE). The DOE doesn’t require any specific technologies, yet certain product features are common. 

Homeowners can claim a Federal Tax Credit for upgrading their primary residence with energy efficient windows and exterior doors.

It’s important to keep in mind that, just like clothing, some windows and skylights are better at insulating you from the cold, whereas others are better at keeping you cool when outside temperatures are warm. Performance criteria for windows and skylights are based on four climate zones: Northern, North-Central, South-Central, Southern) and ratings that have been certified by the NFRC.  
Education Tax Deductions
Education Tax Deductions (Photo credit:

In general, doors provide more insulation than windows or skylights, based upon the amount of glass your exterior doors have, called the “glazing level” and ratings certified by the NFRC.

In addition to claiming a tax credit, if you’ve replaced your windows, skylights or external doors, there are other steps you may take to save money on your taxes. Again, when in doubt, it’s always best to seek the advice of a qualified tax consultant or attorney.

  • · Construction Loan Interest - If you take out a construction loan to build a home, you may qualify to deduct the interest. The IRS only allows a deduction for mortgage interest if the loan relates to your principal residence or a second vacation home used for personal purposes.
  • · Home Office - If you use a portion of your home exclusively for the purpose of an office for your (small) business, you may be able to claim a deduction on your taxes for costs related to insurance, repairs and depreciation. If you upgraded your windows and an exterior door associated with your home office, these too may be considered deductions.
  • · Mortgage Insurance Premiums - You may be able to deduct the premiums paid for private mortgage insurance for your principal residence and for a non-rental second home.
  • · Mortgage Interest Paid at Settlement - If you’ve bought a new home within the past year, on a mortgage of up to $1 million, you can deduct the interest you pay at settlement if you itemize your deductions on Schedule A (Form 1040).
  • · Points - Did you pay points in order to obtain your home mortgage? These fees are included on the income tax deductions list and can be deducted as long as they are associated with the purchase of a home
  • · Property Taxes - If they’re based on the assessed value of the real property, you can deduct your state and local property taxes.
  • · Selling Costs - If you sold a home in the past year, you may be able to reduce your income tax by the amount of your selling costs, which can include title insurance, advertising expenses, broker’s fees, and repairs.
We all know tax codes can be confusing. You may want to consult the IRS’ website for information concerning deductions and credits. To be certain, you should meet with a qualified tax professional to ensure you’re not missing any deductions for which you’re eligible.

In this article, I covered many of the different types of tax breaks the IRS allows for homeowners and individuals and business upgrading their homes and home offices via construction, home improvement loans and energy tax credits. If you found this article useful, pass it on to your friends and neighbors. If you have a comment related to this article, please post it in the Comments section of this blog. It's been my pleasure informing you about these tax breaks. I look forward to our next visit.

Gates Dearen and Richard Walden:  Local owners of HomeRite Windows and Doors in Jacksonville, Florida. We have been serving the building products industry in Florida for over 25 years. We know the products, the industry, the market and what adds great value to a home. Our approach is a little different. We strive to match the homeowner with the right windows for their home and budget. We understand that home improvements can be a hassle. We’re here to make life easier with first-rate, energy efficient products; affordable prices; and expert, award-winning installers that employ the best practices and respect your home as if it were their own. 

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