What types of improvements does the Nonbusiness Energy Property Credit cover?

The Nonbusiness Energy Property Credit is specifically designed to incentivize individuals to make energy-efficient improvements to their homes. This credit applies to certain upgrades that enhance the energy efficiency of a primary residence, such as adding insulation, upgrading windows and doors to energy-efficient models, and installing energy-efficient heating and cooling systems.

The focus of this credit is on improvements that directly impact energy consumption and efficiency, making option D the correct choice. It is important to note that other options do not align with the purpose of this particular tax credit. For instance, investment in renewable energy sources would typically fall under other tax incentives, improvements to rental properties are not covered by this specific credit, and adding extra rooms is a modification that does not relate directly to energy efficiency. Thus, the Nonbusiness Energy Property Credit is best described by energy-efficient home improvements.