Solar water heater on a rooftop in Jerusalem
The recent stimulus bill passed by Congress and signed by the President re-instituted home and business energy tax credits that expired at the end of 2007. The new tax credit has a lifetime cap of $1,500 and on 30 percent of the cost of qualifying improvements made to your home residence in 2009 and 2010. Here is a list of smaller improvements that may qualify:
- Exterior Windows
- Storm Windows
- Skylights
- Exterior Doors
- Storm Doors
- Roofs (metal or asphalt)
- Insulation – Includes seals to limit air infiltration, such as caulk, weather stripping, and foam sealants
- Central A/C
- Air Source Heat Pumps
- Furnace (Natural Gas, Propane or Oil)
- Hot Water Boiler (Gas, Propane, or Oil)
- Advanced Main Air Circulating Fan
- Water Heater (Gas, Oil, Propane, or Electric Heat Pump)
- Biomass Stove
There is also bigger improvements that qualify like solar and wind energy improvements. The property must be certified by the manufacturer in order to qualify and a certification statement must be included in the packaging.
WASHINGON — The Internal Revenue Service today reminded individual and business taxpayers that many energy-saving steps taken this year may result in bigger tax savings next year.
The recently enacted American Recovery and Reinvestment (ARRA) of 2009 contained a number of either new or expanded tax benefits on expenditures to reduce energy use or create new energy sources.The IRS encouraged individuals and businesses to explore whether they are eligible for any of the new energy tax provisions. More information on the wide range of energy items is available on the special Recovery section of IRS.gov. For a larger listing of ARRA’s energy-related tax benefits, see Fact Sheet 2009-10.
Tax Credits for Home Energy Efficiency Improvements Increase
Homeowners can get bigger tax credits for making energy efficiency improvements or installing alternative energy equipment.
The IRS also announced homeowners seeking these tax credits can temporarily rely on existing manufacturer certifications or appropriate Energy Star labels for purchasing qualifying products until updated certification guidelines are announced later this spring.
“These new, expanded credits encourage homeowners to make improvements that will make their homes more energy efficient,” said IRS Commissioner Doug Shulman. “People can improve their homes and save money over the long run.”
ARRA provides for a uniform credit of 30 percent of the cost of qualifying improvements up to $1,500, such as adding insulation, energy-efficient exterior windows, and energy-efficient heating and air conditioning systems. The new law replaces the old law combination available in 2007 of a 10-percent credit for certain property and a credit equal to cost up to a specified amount for other property.
The new law also raised the limit on the amount that can be claimed for improvements placed in service during 2009 and 2010 to $1,500, instead of the $500 lifetime limit under the old law.
In addition, the new law has increased the energy efficiency standards for building insulation, exterior windows, doors, and skylights, certain central air conditioners, and natural gas, propane or oil water heaters placed in service after Feb. 17, 2009.
IRS guidance issued before the enactment of ARRA will be modified in the near future to reflect the new energy efficiency standards. In the meantime, homeowners may continue to rely on manufacturers’ certifications that were provided under the old guidance and on Energy Star labels for exterior windows and skylights in determining whether property purchased before June 1, 2009, qualifies for the credit. Manufacturers should not continue to provide certifications for property that fails to meet the new standards.
The new law also eliminates the cap on the 30 percent tax credit for alternative energy equipment, such as solar water heaters, geothermal heat pumps and small wind turbines, installed in a home. The cap generally has been eliminated for these improvements beginning in the 2009 tax year. The IRS today issued Notice 2009-41, which explains the effects of this change.
HAPPY EARTH DAY!
Below is from Energy Star.gov
SUMMARY OF TAX CREDITS FOR HOMEOWNERS
| Product Category | Product Type | Tax Credit Specification | Tax Credit | Notes |
|---|---|---|---|---|
| Windows & Doors | Exterior Windows and Skylights | *Important Change: Before June 1, 2009: After June 1, 2009: SHGC <= 0.30 | 30% of cost, up to $1,5002 | Not all ENERGY STAR labeled windows and skylights qualify for tax credit. |
| Storm Windows | Meets IECC1 in combination with the exterior window over which it is installed, for the applicable climate zone | 30% of cost, up to $1,5002 | Manufacturer Certification Statement3 will list classes of exterior window (single pane, clear glass, double pane, low-E coating, etc.)4 that a product may be combined with to be eligible in specific climate zones. | |
| Exterior Doors | U factor <= 0.30 SHGC <= 0.30 | 30% of cost, up to $1,5002 | Not all ENERGY STAR doors will qualify. | |
| Storm Doors | In combination with a wood door assigned a default U-factor by the IECC1, and does not exceed the default U-factor requirement assigned to such combination by the IECC | 30% of cost, up to $1,5002 | ||
| Roofing | Metal Roofs, Asphalt Roofs | ENERGY STAR qualified | 30% of cost, up to $1,5002 | All ENERGY STAR metal and asphalt roofs qualify for the tax credit. Must be expected to last 5 years OR have a 2 year warranty. |
| Insulation | Insulation | Meets 2009 IECC & Amendments | 30% of cost, up to $1,5002 | For insulation to qualify, its primary purpose must be to insulate (example: insulated siding does not qualify). Must be expected to last 5 years OR have a 2 year warranty |
| HVAC | Central A/C | Split Systems: EER >=13 SEER >= 16 Package systems: | 30% of cost, up to $1,5002 | For a list of qualified products, go to the Consortium for Energy Efficiency product directory  , click on Air Conditioners, then in the “CEE Tier” enter “Residential Advanced Tier 3” for CAC Split Systems, and “Residential Tier 2″ for CAC Package Systems and ASHPs.Note — not all ENERGY STAR products will qualify for the tax credit. View ENERGY STAR criteria. |
| Air Source Heat Pumps | Split Systems: HSPF >= 8.5 EER >= 12.5 SEER >= 15 Package systems: | 30% of cost, up to $1,5002 | ||
| Natural Gas or Propane Furnace | AFUE >= 95 | 30% of cost, up to $1,5002 | For a partial list of qualifying products go to: Air-Conditioning, Heating, Refrigeration Institute (AHRI) Not all ENERGY STAR products will qualify for the tax credit. View ENERGY STAR criteria for furnaces, boilers. | |
| Oil Furnace | AFUE >= 90 | 30% of cost, up to $1,5002 | ||
| Gas, Propane, or Oil Hot Water Boiler | AFUE >= 90 | 30% of cost, up to $1,5002 | ||
| Advanced Main Air Circulating Fan | No more than 2% of furnace total energy use. Read this FAQ if the fan qualifies, but the furnace does not. | 30% of cost, up to $1,5002 | ||
| Water Heaters | Gas, Oil, Propane Water Heater | Energy Factor >= 0.82 or a thermal efficiency of at least 90%. | 30% of cost, up to $1,5002 | All ENERGY STAR gas tankless water heaters will qualify. There are currently no ENERGY STAR qualified gas storage tank or gas condensing water heaters that qualify. View ENERGY STAR criteria for water heaters. For a partial list of qualifying products go to: Air-Conditioning, Heating, Refrigeration Institute (AHRI) |
| Electric Heat Pump Water Heater | Same criteria as ENERGY STAR: Energy Factor >= 2.0 | 30% of cost, up to $1,5002 | All ENERGY STAR electric heat pump water heaters qualify for the tax credit. | |
| Biomass Stove | Biomass Stove | Stove which burns biomass fuel5 to heat a home or heat water. Thermal efficiency rating of at least 75% as measured using a lower heating value. | 30% of cost, up to $1,5002 | |
| Geo-Thermal Heat Pump | Geo-Thermal Heat Pump | Same criteria as ENERGY STAR: Closed Loop: Open Loop: Direct Expansion: | 30% of the cost | All ENERGY STAR geo-thermal heat pumps qualify for the tax credit. Use IRS Form 5695 Must be “placed into service” before December 31, 2016. |
| Solar Energy Systems | Solar Water Heating | At least half of the energy generated by the “qualifying property” must come from the sun. Homeowners may only claim spending on the solar water heating system property, not the entire water heating system of the household. The credit is not available for expenses for swimming pools or hot tubs. The water must be used in the dwelling. The system must be certified by the Solar Rating and Certification Corporation (SRCC). | 30% of cost | All ENERGY STAR solar water heaters qualify for the tax credit. Use IRS Form 5695 Must be placed in service before December 31, 2016. |
| Photovoltaic Systems | Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement. | 30% of cost | Use IRS Form 5695  Must be placed in service before December 31, 2016. | |
| Small Wind Energy Systems | Residential Small Wind Turbines | Has nameplate capacity of not more than 100 kilowatts. | 30% of cost | Use IRS Form 5695 Must be placed in service before December 31, 2016. |
| Fuel Cells | Residential Fuel Cell and microturbine system | Efficiency of at least 30% and must have a capacity of at least 0.5 kW. | 30% of the cost, up to $500 per .5 kW of power capacity | Use IRS Form 5695 Must be placed in service before December 31, 2016. |
| Cars | Hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles | Based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models | There is a 60,000 vehicle limit per manufacturer before a phase-out period begins. Toyota and Honda have already been phased out. Credit is still available for Ford, GM and Nissan. For more information visit: Fueleconomy.gov Use IRS Form 8910 Use IRS Form 3800 | |
| Plug-in hybrid electric vehicles | $2,500–$7,500 | The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits). Effective January 1, 2009. |
1Either the 2001 Supplement of the 2000 International Energy Conservation Code or the 2004 Supplement of the 2003 International Energy Conservation Code.
2Subject to a $1,500 maximum per homeowner for all improvements combined.
3A Manufacturer’s Certification is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit. The IRS encourages manufacturers to provide these Certifications on their website to facilitate identification of qualified products. Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.
4Additional information on exterior window features may be viewed at Anatomy of an Energy Efficient Window.
5Biomass Fuel means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.
The IRS defines “placed in service” as when the property is ready and available for use.
Efficient Cars
Starting January 1, 2009, there is a new tax credit for Plug-in hybrid electric vehicles, starting at $2,500 and capped at $7,500 for cars and trucks (the credit is based on the capacity of the battery system). The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits).
Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010. See the IRS Website for updated information .
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