In December, Congress reduced the federal tax credit for energy-efficient windows, doors, and skylights for 2011 and changed the qualifying criteria. The Window and Door Manufacturers Association (WDMA) provides an overview of four important changes reflected in the “Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act.”
Qualifying products — All Energy Star-qualified windows, skylights, and exterior doors are eligible. Products must be installed in a consumer's existing primary residence; new construction is not eligible.
Credit amount — Consumers can claim a credit of 10 percent up to $200 of the purchase price of qualifying windows and skylights and 10 percent up to $500 for qualifying exterior doors. Installation costs are not included.
Lifetime cap — There is now a lifetime limit of $500 ($200 for windows/skylights) in total credits that a homeowner can claim from Jan 1, 2006 to Dec. 31, 2011. It is not on top of the $1,500 limit in 2009-2010. So if they have already reached or exceeded the $500 limit, they are no longer eligible to claim the credit in 2011. The $500 aggregate lifetime limit is for any combination of all tax credit qualifying products (HVAC, insulation, roofing, etc), not just windows, doors and skylights. If they have claimed less than $500, they can claim the difference up to the $200 cap for windows and skylights and $500 for exterior doors.
Duration — The revised tax credit is in effect for products installed in a consumer's primary residence between January 1 and December 31, 2011.