The recently-passed Stimulus Bill (The American Recovery and Reinvestment Act of 2009) contains changes and additions to previous energy efficiency tax credits. These changes include:
· an extension of credits available for 2009 to 2010,
· a credit amount increase from 10% to 30%,
· credits formerly ascribed a dollar amount have been converted to 30% of the cost of the project
· maximum credit has been increased to $1500, except for some major projects like geothermal heat pumps, solar panels and solar water heaters
· the $200 maximum per window has been removed, but windows must meet stricter efficiency requirements than before
So what are you going to buy?
Windows and Doors
Exterior windows and doors that effectively reduce leakage, improve insulation and reduce heat transfer are eligible for credits. Exterior doors and windows are given a “U-Factor” rating. The U-factor is a measure of the heat transfer through a window or door (or skylight) and indicates how well the product insulates. The lower the U-factor the greater the resistance to heat flow in and out and the better its insulation value. U-factor values range from 0.25 (most efficient) to 1.25. To qualify for tax credits, windows and doors must have a U-factor of at least 0.30.
Another performance rating is the Solar Heat Gain Coefficient or SHGC. This measures how well a product blocks out the sun’s heat. As with the U-factor, the SHGC is most efficient and effective when the rating is a lower number. SHGC is measured on a scale from 0 to 1 and values typically fall in the 0.25 – 0.80 range. As with U-factor, to qualify for tax credits, the SHGC must be at least 0.30.
The information on energy performance may be found on the National Fenestration Rating Council (NFRC) label that is required of all windows and doors. The NFRC is an independent non-profit organization that provides standards and consistent labeling for energy efficiency for the industry supplying windows, doors and skylights.
Storm windows and doors are also eligible for tax credits. The credit, as for external windows and doors would be 30% of the total cost (NOT including installation) up to $1500. Storm windows and doors must simply be in compliance with the 2000 International Energy Conservation Code or the 2004 supplement of the 2003 Code. This information would be found on the Manufacturer Certification Statement. This is a signed statement made by the manufacturer of a window/door that certifies that the product or component qualifies for the tax credit. If you purchase storm windows/doors, be sure to keep a copy of this statement, although it is not necessary to submit a copy with tax returns.
If your water heater has been working for the past 10 years or more, it might be time to retire it. Water heating is often the third largest energy expense in the home (after heating and cooling) and can account for 13-17% of your utility bill (FCS3277, 2008.) There are tax credits to cover 30% (up to $1,500) of your purchase of a gas, oil, or propane systems. For these systems, check for the EnergyStar label, and for an Energy Factor of greater than or equal to 0.82. The Energy Factor (EF) is the ratio of useful energy output from the water heater to the total amount of energy delivered to the water heater. The higher the EF is, the more efficient the water heater (FCS3277, 2008.)
Solar water heaters also qualify, but they must derive half of the energy necessary to heat the water from the sun. Luckily here in Florida that is not much of a problem!
Roofing and Insulation
As with most of the other qualifying home energy-efficiency improvements, there are tax credits for 30% or up to $1,500 (installation not included) for roofing and insulation improvements. All EnergyStar rated metal and asphalt roofs qualify.
In addition to the above products that can help your home become more energy efficient and reduce your monthly energy bill, there are others that qualify for Federal tax incentives.
Make sure you have done your research when making any home improvement purchases, and if you are interested in tax credits, the links below should be helpful.
Federal Tax Credits for Energy Efficiency – EnergyStar
Residential Energy Efficient Property Credit – IRS Form 5695
Tax Incentives Assistance Project
Energy Efficient Home Series – University of Florida /IFAS Extension