Photo Credit: Gawker.com
In the American Recovery and Reinvestment Act of 2009, a provision was included that gives homeowners a tax credit for energy efficient upgrades they make to their home. For small projects, the tax credit is only available on existing homes, but for larger projects, homeowners can receive a tax credit on an existing home and on new construction.
Smaller projects get a 30% tax credit, but they have a max available credit of $1,500 through 2010. Small projects include upgrades on items such as windows, doors, insulation, water heaters and biomass stoves.
Larger projects get a tax credit of 30%, but there is no max. In addition, homeowners can receive a tax credit on the installation costs for larger projects through 2016. Unfortunately, if you don’t need the entire tax credit, you won’t get a check from the government. The tax credit can wipe out all that you owe, but there are no refunds.
Some of the upgrades available, and the qualifications that must be met to claim the credit, can be found on Energy Star’s “Federal Tax Credits for Energy Efficiency”.
Smaller Projects: Tax credit of 30% up to $1,500 – through 2010:
- Every Energy Star asphalt or metal roof qualifies for the tax credit.
- All windows and doors with a U-Factor and solar-heat-gain coefficient of 0.30 or less qualify for the credit.
- Many of the guidelines for insulation are not yet clear, but it must last five years or have a two year warranty. Rigid board, geothermal heat pumps and blankets and loose fill all qualify. Insulated siding and non-solar water heaters do not qualify.
There are also some heating and cooling systems along with certain water heaters that qualify for the credit.
Larger projects: No cap, 30% of the cost – tax credit on installation through 2016:
- Geothermal heat pumps use an estimated 30% less energy than standard pumps and all Energy Star geothermal heat pumps qualify for the tax credit.
- Every Energy Star rated solar water heater will qualify for the tax credit.
There are no federal qualifying restrictions placed on small wind energy systems or solar/photovoltaic panels, all of them qualify for the tax credit.
Source:
How to Clean Up in 2009 With Tax Credits for the DIYer
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I’ve considered doing some energy efficient upgrades to my home, but still not sure if it really pays off. Even with the tax benefit.
That was probably a good catch for real estate if your about to upgrade homes into more efficient and energy saving homes. In case you will really get tax credit from it not bad right?
Energy efficient upgrades in houses are good,but many take this as a risk even if the benefits are good to the environment of the property.
Yeah I’m also not that financially-savvy to determine whether or not these would save me some dough.
Besides mentioning the actual savings these energy efficient upgrades generate, maybe contractors can partner up with tax accountants/lawyers to calculate how much a homeowner will actually save in taxes. I think this would be an effective information in persuading unsure homeowners.
I’m also not sure if this is feasible or how this will be implemented since each individual case is different; maybe they can give out estimates based on different level of incomes.
-Eddie W
I think that this is great what the govermnent is doing with tax credits…the hardest part is being able to afford to be able to upgrade your home with a more energy efficient a/c or heater. One way you can get this money is by taking out a home equity loan for major appliance upgrades or windows to make your home more energy efficient.
dave@home improvement tips´s last blog ..How To Install a Mailbox
If budget is an issue, then focus on something that you can afford that would have the largest impact to your long-term energy consumption. I say plugging in air leaks would yield a substantial savings so getting new windows should be on top of your list.
Or maybe I’m just biased. Lol
Thanks for the information. I will pass the information on to my clients, friends and family. The smaller projects would appear to provide the most bang for the buck.
Augusta Real Estate´s last blog ..Fantastic townhome in great West Augusta location
I think the tax credits are great if you need to upgrade, but depending on how long you plan to stay in your residence could be the determining factor in choosing one of the upgrades. Trying to get your investment back may be tough if your one of those people that move frequently.
Tracy CA Homes´s last blog ..Holidays On The Farm (Lathrop, Ca)
Thanks for the info. I have been going over the numbers for my home, checking to see how long these upgrades would take to in turn pay for themselves. Things such as the solar panels would take quite some time to brake even on.