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Tax credits for home improvements

September 28th, 2009 Leave a comment Go to comments

I am getting asked about this more and more now, so I went looking for an up-to-date list of the currently available tax credits for homeowners regarding energy efficiency improvements to a dwelling.  I found this list on the Energy Star web site, which is good information that could really effect the bottom line of a project.

Tax credits are now available for home improvements:

  • must be “placed in service” from January 1, 2009 through December 31, 2010
  • must be for taxpayer’s principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
  • $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
  • must have a Manufacturer Certification Statement to qualify
  • for record keeping, save your receipts and the Manufacturer Certification Statement
  • improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
  • If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters. More.
SUMMARY OF TAX CREDITS FOR HOMEOWNERS
Product Category Product Type Tax Credit Specification Tax Credit Notes
Insulation Insulation Meets 2009 IECC & Amendments 30% of cost, up to $1,5001 FAQ on Insulation.

Check to see if you have Home Performance with ENERGY STAR in your areas. Adding insulation to your home is covered.

Windows & Doors Windows, Doors, and Skylights Before June 1, 2009:
Must meet ENERGY STAR criteria

After June 1, 2009:
U factor <= 0.30

SHGC <= 0.30

30% of cost, up to $1,5001 Not all ENERGY STAR labeled windows, doors, and skylights qualify for tax credit.

More information

Storm Windows & Storm Doors In combination with the exterior window over which it is installed:

  1. has a U-factor and SHGC of 0.30 or below
  2. Meets the IECC
30% of cost, up to $1,5001 FAQ on Storm Doors and Storm Windows.
Roofing Metal Roofs,
Asphalt Roofs
All ENERGY STAR qualified metal and reflective asphalt shingles 30% of cost, up to $1,5001 FAQ on Roofs.
HVAC Central A/C Split Systems:
SEER >= 16, EER >=13

Package systems:
SEER >= 14, EER >= 12

30% of cost, up to $1,5001 FAQ on Central ACs.

FAQ on Air Source Heat Pumps.

Note — not all ENERGY STAR products will qualify for the tax credit.

Air Source Heat Pumps Split Systems:
HSPF >= 8.5, EER >= 12.5, SEER >= 15

Package systems:
HSPF >= 8, EER >= 12, SEER >= 14

30% of cost, up to $1,5001
Natural Gas or Propane Furnace AFUE >= 95 30% of cost, up to $1,5001 FAQ on Furnaces and Boilers.

Note — not all ENERGY STAR products will qualify for the tax credit.

Oil Furnace AFUE >= 90 30% of cost, up to $1,5001
Gas, Propane, or Oil Hot Water Boiler AFUE >= 90 30% of cost, up to $1,5001
Advanced Main Air Circulating Fan No more than 2% of furnace total energy use. 30% of cost, up to $1,5001 FAQ: What if the fan qualifies, but the furnace does not?
Water Heaters Gas, Oil, Propane Water Heater Energy Factor >= 0.82
or a thermal efficiency of at least 90%.
30% of cost, up to $1,5001 FAQ on Water Heaters.
Electric Heat Pump Water Heater Same criteria as ENERGY STAR: Energy Factor >= 2.0 30% of cost, up to $1,5001
Biomass Stove Biomass Stove Stove which burns biomass fuel 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 $1,5001 FAQ on Biomass Stoves.
Geo-Thermal Heat Pump Geo-Thermal Heat Pump Same criteria as ENERGY STAR:

Closed Loop:
EER >= 14.1, COP >= 3.3

Open Loop:
EER >= 16.2, COP >= 3.6

Direct Expansion:
EER >= 15, COP >= 3.5

30% of the cost All ENERGY STAR geo-thermal heat pumps qualify for the tax credit.

What about water-to-water geothermal heat pumps?

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.

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 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 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 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 Exit ENERGY STAR

Use IRS Form 8910 PDF Exit ENERGY STAR for hybrid vehicles purchased for personal use.

Use IRS Form 3800 PDF Exit ENERGY STAR for hybrid vehicles purchased for business purposes.

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.

1Subject to a $1,500 maximum per homeowner for all improvements combined.

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 Exit ENERGY STAR.

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