|
Since 2006, tax credits for energy-efficient products have allowed U.S. homeowners to enjoy the “triple crown” of energy efficiency: lower home energy bills, lower federal income taxes, and increased home comfort. Now, consumers stand to receive a savings of up to 30 percent more on their investment, thanks to the latest tax credits included in the American Recovery and Reinvestment Act (ARRA), which has raised the cap on energy efficiency home improvements to $1,500 in federal income tax credits through 2010.
That’s three times what older, now-expired tax credits were worth, which can help make these energy efficiency upgrades more affordable. In addition, the longer time frame gives homeowners more time to plan and budget for the more costly energy efficiency upgrades, which will provide a terrific return on investment for years to come in the form of lower energy costs.
And of course, savvy consumers who make such energy efficiency upgrades can also be proud of reducing their personal carbon footprint – because using less energy in their homes means emitting less pollution, too.
ARRA's federal income tax credits for specific home improvements are very similar to those that were in effect in 2006 and 2007. However, consumers should be aware of some “new wrinkles”, mostly having to do with the installation of specific products and equipment that qualify for the 2009-10 tax credits.
Consumers should also be aware of the all-important detailed criteria for qualifying products:
- For each type of qualifying equipment, the credit is for 30 percent of the cost up to $1,500.
- It is a one-time tax credit with a maximum of $1,500 per taxpayer over the 2009-2010 time frame. The $1,500 may be used in one single year or spread among the two years.
- Homeowners who claimed any part of the $500 credit available in 2006-2007 can still claim the full $1,500 credit for additional qualifying products bought and installed in 2009 and/or 2010.
- There are two basic categories of qualifying equipment – “building envelope” products and heating and cooling equipment.
- Building envelope products are replacement windows and doors (including storm windows, storm doors, and skylights), certain ENERGY STAR asphalt and metal roofs, insulation, and other sealing products.
- Heating and cooling equipment includes furnaces, boilers, gas or propane water heaters, central air conditioning systems (but not window air conditioner units), and biomass stoves.
- Installation costs are not covered for building envelope products.
- Installation costs are covered for heating and cooling equipment.
- For some products, the qualifying criteria are more stringent than they were in 2006 and 2007 and, under different legislation, in early 2009 (from January 1, 2009, though February 17, 2009, the date that the ARRA was signed into law). For example, all ENERGY STAR windows no longer qualify; now they must meet additional energy efficiency criteria.
- Specific efficiency criteria also apply to heating and cooling equipment. But for exterior windows and skylights, the older criteria apply to products purchased and put into service before June 1, 2009.
- Homeowners who purchased and put into service equipment meeting those older criteria between January 1 and February 17, 2009, can still claim the higher percentage of the cost (30 percent) and the higher dollar amount ($1,500).
- There are additional incentives for geothermal heat pumps, solar and wind systems that fall outside of the 30 percent/$1,500 caps.
Visit www.ase.org/taxcredits and www.energytaxincentives.org for more information about eligible products.
|
