Text by Maureen Blaney Flietner © 2009
BobVilaContractors.com
The American Recovery and Reinvestment Act of 2009, which was signed into law Feb. 17, 2009, provided improved federal tax credits for certain energy-efficiency products and renewable energy systems. Just make sure the products and systems you consider are eligible.
Weather Shield� Premium Fiberglass-clad wood windows are at the leading edge of energy efficiency, durability and aesthetic appeal with U-factors to 0.23, no-maintenance exteriors, and true wood interiors.
Energy Conservation
For those with existing homes, a tax credit of 30 percent is available for qualifying energy-efficiency products. An aggregate $1,500 cap has been set for all qualifying products over the lifetime of the tax credit period of 2009 and 2010. These benefits replace the previous 10 percent tax credit and varying caps on individual improvements.
The energy-efficiency standards required of the products has been raised. The Energy Star Web site lists requirements for the windows, doors, insulation, metal and asphalt roofs, heating, ventilating and air conditioning products, non-solar water heaters and biomass stoves that are eligible.
In a press release, Greg Miedema, remodelers chairman of the National Association of Home Builders and a remodeler from Tucson, Ariz., notes that �these new tax credits are another way that the home building industry can combat the potential effects of global climate change by encouraging home owners to make energy-efficient improvements to their homes.� The new credits are estimated to generate $6 billion in remodeling work by the end of 2010.
Here are a few of the options.
For water heaters, those that were installed from Jan. 1, 2009 through Feb. 16, 2009 must have at least a .80 Energy Factor (EF) rating or 90 percent thermal efficiency to qualify. But for those installed since Feb. 17, the water heater must have at least a .82 EF rating or 90 percent thermal efficiency to qualify.
�By encouraging the installation of high-efficiency water heaters, the government is addressing a long-term energy conservation challenge while consumers begin to save immediately on their utility bills,� said David Chisolm, water heater brand manager for A. O. Smith water products company based in Ashland City, Tenn. Its Vertex� and tankless product lines both qualify for the $1,500 tax credit if the initial service date is between Jan. 1, 2009 and Dec. 31, 2010.
Windows and doors have new criteria to meet, which is even more stringent than current Energy Star specifications. They must achieve a .30 or lower U-factor (a measurement of the rate at which they conduct non-solar heat flow) and .30 or lower Solar Heat Gain Coefficient (SHGC) (the fraction of solar radiation that they admit).
�The .30/.30 criteria is stringent and difficult for many manufacturers to meet, but the payoffs for individual homeowners and the country collectively will be significant in terms of energy savings,� says Dave Koester, brand manager for Schield Family Brands. �Our years of investing into the development of energy-efficient products have now been validated. Very few manufacturers can offer the selection that we do.� The company, based in Medford, Wis., includes Weather Shield�, Peachtree�, Visions�, Crestline� and Vetter� brands. Several of its solutions, such as Zo-e-shield energy glass, enable the products to meet or exceed the criteria. The company�s new fiberglass-clad product line delivers U-factors as low as .23.
A qualifying garage door can not only help stop outside air from leaking into the garage and influencing home temperatures, it can add style and curb appeal, according to the Door & Access Systems Manufacturers� Association and the International Door Association. Its Web site, Garagewownow.com, offers details about door qualifications and a ZIP code search function to find local dealers. Many Web sites of major garage door manufacturers now prominently include detailed information about the tax credits and specific door models that qualify.
Renewable Energy
For those who want to harness renewable energy, enhanced incentives are available to existing and new homes. Tax credits are available for qualifying geothermal heat pumps, solar panels, solar water heaters and small wind energy systems.
Tax credits are now 30 percent of the cost, with no upper limit, through 2016. Those who installed systems in 2008 had their tax credit capped at $2,000. The credit is available not only for qualifying systems at the principal residence but at rental units, second homes and vacation homes.
A tax credit also can be applied against the cost of a qualifying fuel cell for a taxpayer�s principal residence. The credit covers up to $500 per 0.5 kW of nameplate capacity.
Calculating Credits
What makes these incentives particularly enticing is that they are federal tax credits, not tax deductions. A personal tax credit reduces the federal taxes paid on a dollar-for-dollar basis. A person could owe $1,500 in taxes but enough qualifying improvements could eliminate that tax due. If the incentive had only been a tax deduction, it would only have decreased the amount of income on which the tax is figured.
Check with the Internal Revenue Service and Energy Star for details about the federal tax credits. Here are a few guidelines from the Energy Star information:
If a person does not owe federal income taxes, he or she cannot claim a tax credit. In addition, a person can�t get back more in credits than what he or she paid to the government in taxes. However, if the federal tax credit exceeds a person�s tax liability, the excess amount may be carried forward to the succeeding taxable year.
For the energy-efficiency products, the tax credit is based on the total material cost of the purchase but does not include the cost of installation. The $1,500 tax credit for the energy-efficiency products is the total combined credit for the two years, 2009 and 2010, that the act covers. Spend enough to obtain the entire $1,500 credit in one year and that is the extent of the credit. There is no additional credit in the other year.
For the residential renewable energy products, except the fuel cell, there is no cap. Taxpayers can enjoy a 30 percent tax credit that covers not only the qualifying system but its installation. For fuel cells, there is a tax credit cap of $500 per 0.5 kW.
Those considering the qualifying energy-efficiency products or renewable energy systems should check with their tax professional to determine what is best for their individual tax situations. In addition, check for special incentives offered by product manufacturers, individual states and utilities.
Make Cost-Effective Decisions
Before planning your energy-efficiency and renewable energy projects, assess your situation to make your decisions the most cost-effective.
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If you have an existing home, consider a home energy audit from a qualified professional. RESNET, the Residential Energy Services Network, is one organization that offers a directory of certified hone energy raters. The professional should be able to review your home and provide performance testings, such as a blower door test, to see where the house might be leaking energy. With that information, it�s easier to set your priorities and better decide on energy-efficiency products most needed by your home.
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Tax credits for qualifying energy-efficiency products such as windows and insulation are only available for existing homes. New homes as well as existing homes, however, are eligible for the residential renewable energy credits.
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Keep records and receipts. One record, in particular, to have is the Manufacturer Certification Statement, which is a signed statement from the manufacturer that certifies that the product or component qualifies for the tax credit. Some manufacturers have them available on their Web sites. A copy of the statement should be kept for records but it does not have to be submitted with tax returns.
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The IRS requires that any credits for qualifying energy-efficiency products be available only for those �placed in service,� or what it considers ready and available for use, from Jan. 1, 2009 through Dec. 31, 2010.
For more ideas on how to go green, check out:
"20 Energy-Saving Ideas for 2009",
"10 Tips to Go Green in Your Yard" and
"Easy Greening: Affordable Ways to Green Your Home".
