Insulation in the walls and attic spaces, and sealant around the doors and windows helps trap air inside your home. By properly insulating your home, you cut down on your utility costs since the air from your air conditioner or heater cannot leak out. Good insulation also means you can use your heating and cooling system less, which helps the environment. The federal government offers a tax credit for updating your home's insulation.
Several insulation and sealant products qualify for a tax credit. For example, you can get a tax credit if you purchase insulation materials for your walls or attic. Standard bulk rolls of insulation, spray foam type insulation and liquid to solid pour-in-place insulation count toward the credit. You can also receive a credit for updating the sealants on your home. For example, if you claim a credit if you install weather stripping around your windows or doors.
You can receive a tax credit up to a certain amount, regardless of the amount of materials you buy. You must claim insulation and sealant materials under the same tax credit. Energy Star reports that as of 2011, you can claim up to 10 percent of your total cost, to a maximum of $500 toward the Residential Energy Credits.
The Residential Energy tax credit has certain limitations. For example, you can only claim the cost of purchasing materials to insulate your home. If you hire a professional contractor to complete the work, you cannot claim paying for the installation. You can only claim the insulation credit once on your taxes and you must submit the credit in the same year you purchased the materials.
You can claim a tax credit for any purchased insulation materials by completing Form 5695 from the Internal Revenue Service. You should keep your receipts from any qualified purchase and any statements you receive from the manufacturer. You do not need to provide these with your taxes, but you may need them to determine the correct amount of credit.
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