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Federal Energy Efficiency Tax Credits
By Amanda Goucher
The Federal Government continues to provide incentives to homeowners to help encourage improvements in energy efficiency. Credit opportunities exist for everything from cars and appliances to homes and buildings. With more available options for energy-efficient appliances and products, a tax incentive is a wonderful way for the public to become more aware of green alternatives.
Credits are available for both residential and commercial buildings. Many credits are based on standards for the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) or Energy Star, and must meet International Energy Conservation Code (IECC). Tax credit details for home improvements:
- Improvements must be installed between January 1, 2009 and December 31, 2010.
- They must be for your principal residence, except for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems, where second homes and rentals qualify.
- Each must have a Manufacturer Certification Statement3 to qualify.
- For record keeping, save the Manufacturer Certification Statement and your receipt.
- Claim improvements made in 2009 on your 2009 taxes (filed by April 15, 2010). Use IRS Tax Form 5695 (2009 version), which will be available in 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 (Source: EnergyStar.gov)
- Alternatively, in order for the credit to qualify biomass stoves, Heating, Ventilation, and Air Conditioning (HVAC), insulation, roofs, water heaters, and/or windows and doors, these improvements must occur in an existing home that is your principal residence. (Source: EnergyStar.gov)
- $1,500 is the maximum total amount you can claim for products placed in service in 2009 and 2010 for most home improvements. Exceptions – in effect through 2016 – are geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems, which are not subject to this cap.
An eligible residential project could include new roofing using metal or reflective shingles that meet ENERGY STAR standards. In this case, the tax credit would be for 30% of the cost of roofing materials only, up to $1,500. This is one of many examples of residential upgrades. The ENERGY STAR website and www.dsireusa.org have many more specific examples (and ideas) for green residential upgrades and describe any stipulations there in.
Commercial Sector
Tax credits in the commercial sector include a tax deduction of up to $1.80 per square foot for owners or designers of new or existing commercial buildings that can save at least 50% of the heating and cooling energy of a building meeting ASHRAE Standard 90.1-2001. Windows, doors, and skylights are also a great way to take advantage of this credit program.
For a complete list of products and requirements, qualifications, and instructions on how to apply for these credits, visit the Energy Star website (energystar.gov/taxcredits). You can also find Frequently Asked Questions about the tax credits there.
Amanda Goucher is NAR's Green Designation Coordinator.