Homeowners can continue to take advantage of the residential energy property credit but at lower amounts for 2011.  The nonrefundable credit for qualifying energy property was one of several Bush tax cuts temporarily reinstated as part of the recent Tax Relief Act of 2010.

The maximum credit allowed under the new law is $500 over the lifetime of the taxpayer.  It is reported on Form 5685 and attached to Form 1040.  The $500 amount must be reduced by the aggregate amount of energy credits taken by the taxpayer in 2006, 2007, 2009 and 2010.  The home subject to improvements must be the taxpayer’s principal residence located in the United States.  The prior tax credit that was 30% of the cost up to $1,500 has expired.

Here is a general list of credit dollar limitations applicable to energy property placed in service during 2011:

• $50 for any advanced main air circulating fan;
• $150 for a qualified natural gas, propane, or oil furnace or hot water boiler;
• $300 for any item of energy-efficient building property;
• $200 for exterior windows and skylights.

Additional limitations apply and minimum energy standards have changed.  For more information visit www.energystar.gov.