Instructions for Filing for the Energy Tax Credit on Your Tax Return

On the 2006 and 2007 tax returns, homeowners should note the NEW refunds available on their 1040 forms. Line 52 captures the “Residential energy credits”, which include up to a $500 credit for the installation of a cool metal roof.

To receive the tax credit, a homeowner needs to attach IRS Form 5695 to their 1040 tax returns. In Part 1, line 2-d of Form 5695, the homeowner enters the cost of the metal roof.

The credit covers the cost of the components only and does not include costs of onsite preparation, assembly or installation. The credit that is applied to the total tax liability calculated on the 1040 form represents 10% of the cost of the cool metal roof up to a maximum of $500, which is subtracted from the overall tax liability on the return.

As of today, the tax incentive portion of the Energy Policy Act of 2005 will expire on December 31, 2007. However, close to a dozen bills have been introduced in the US Senate and House of Representatives that deal with energy and climate change. Many of these have provisions to extend the deadline for the residential construction market.