Home Energy Tax Credits: It Is Not Too Late

November 16, 2009 - Posted by Janet

Thinking of remodeling your home or upgrading your heating and cooling equipment? You may be eligible for a federal tax credit to help reduce the cost! Homeowners can receive a tax credit for making energy-efficient home improvements or for installing high-efficiency heating and cooling or water-heating systems. The incentive is equal to 30% of the cost of materials or installation for projects—subject to an overall cap of $1,500.

What Types of Improvements Are Eligible?

A variety of energy-efficient building products and equipment are eligible for the tax credit, including: windows and doors, insulation, metal and asphalt roofs, heating and cooling, water heating, and biomass stoves. The following are the specific eligibility requirements for each type of product.
  • Replacement windows and external doors. Eligible replacement windows and doors must be equal to or below a 0.30 U Factor and Solar Heat Gain Coefficient.
  • Insulation. Insulation added to walls, ceilings, or other parts of the home—as specified in the 2009 IECC model energy code.
  • Roofing. Reflective metal or asphalt roofing material with appropriate pigmented coatings or cooling granules for reducing heat gain in a home.
  • Heating and cooling equipment. High-efficiency furnaces must meet an Annual Fuel Use Efficiency (AFUE) of 95 or better. Central air-conditioning units must have a Seasonal Energy Efficiency Rating (SEER) of 16 or higher.
  • Water heating. Water heaters must have an Energy Factor (EF) of at least 0.82 or a thermal efficiency of at least 90%.
  • Biomass stoves. Stoves must have a thermal efficiency of 75% or higher and be used for space or water heating. Biomass includes anything from agricultural crops, trees, plants, or grasses.

Confused about all of these factors, codes, and ratings? Manufacturers are required by Internal Revenue Service (IRS) regulations to certify that the product meets the requirements for the tax credit. Ask your retailer or installer about certified products. Also visit the ENERGY STAR® Web site. ENERGY STAR is a joint program of the U.S. Department of Energy and Environmental Protection Agency that certifies energy-efficient products. Many of their products are eligible for the home energy tax credits.

What You Need to Qualify

To qualify, the home improvement must be for the taxpayer’s principal residence. Eligible home improvements must be installed or completed between January 1, 2009 and December 31, 2010. Improvements completed in 2009 can be claimed on your 2009 taxes, which must be filed by April 15, 2010. Cannot complete a project by the end of the year? Do not panic. Home improvements completed next year can be filed on your 2010 taxes.
When applying for the tax credit, use the IRS Residential Energy Efficient Property Form 5695. Make sure and obtain the manufacturer’s certification that the product installed meets the eligibility requirements for the tax credit. This certification does not need to be submitted to the IRS at tax time, but it would be a good idea to keep it for your records. Also, keep records of when each eligible improvement was installed and completed, as well as the total costs.
For more details about the tax credits and how you can apply, see Internal Revenue Bulletin 2009-25 Nonbusiness Energy Property.

Rebates from National Grid

In addition to tax credits from the federal government, cash rebates from National Grid can enhance the affordability of energy efficiency improvements. Please visit www.powerofaction.com/efficiency to learn more.
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This entry was posted on Monday, November 16th, 2009 at 1:40 pm and is filed under REDUCE. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.

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