I started out on Tax credit blog series and posted already 2 blogs(Taxpayer Tax credit and New Home buyer Tax credit) talking about useful Obama’s Tax credits which many tax payers like you and me can use. In this 3rd part of the series, I am collected some details and providing insight about the energy credits.
ENERGY TAX CREDIT: Weatherizing homes will save money
The stimulus 2.0 bill provides about $50 billion aimed at ushering in a clean-energy future and includes tax credits for Americans to weatherize their homes and buy hybrid cars.
The bill extends and modifies the tax credits for qualifying products as established in the Energy Tax Policy Act of 2005. Qualifying products purchased between February 17, 2009 and December 31, 2010 are eligible for a tax credit equal to 30 percent of the product cost. The maximum amount of homeowner credit for all improvements combined (including windows, doors, roofing, insulation, HVAC, and water heaters) is upto $1,500 during 2009 and 2010.
The bill sets aside $5 billion to weatherize more than 1 million modest-income homes, saving families an average $350 a year. It devotes $6.3 billion to improve federally backed and public housing projects with new insulation, windows and furnaces. Higher-income households can make similar improvements and get expanded tax credits.
While many analysts cheered provisions to weatherize homes as both an instant way to create jobs and put money in consumers’ pockets, some say other initiatives are insufficient and won’t deliver a quick economic boost.
The bill also has provision to give tax credit of up to $7,500 for families that buy plug-in hybrids to spur a new generation of cars which is a good to help the environment and help Detroit. But automakers won’t have plug-in hybrids and battery-power electrics in showrooms until next year at the earliest. “To roll that into a stimulus is almost misleading,” echoed by many analyst .
As usual, there are caveats to this tax credit as well. Here is some I collected from web:
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 and rentals 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.
You can get more detail breakdown at energystar.gov
Vijai’s 2 cents:
I myself currently researching into getting some energy efficient windows and doors for my house if they can promise good energy and money savings. It is good way to go green and get green(money) back.
But the usual energy star rated windows and door won’t cut the deal. What you need is, any replacement window or door you buy has to be an U-Factor and SHGC of .30 or less. If the window company won’t show you the NFRC sticker certifying the ratings, walk away. If you’re unsure or suspicious, visit the NFRC at http://www.nfrc.org. You can verify ratings in the product directory or contact them directly. This article from Ezinearticles.com has some more details.
So if its going to cost me $2500 for the total project and I can get the maximum credit of $1500. My investment is only $1000. If I can get $50 savings per month, I can recoup my money in 2 years, its all savings after that. You can get some manufacturer and retailer details at nfrc.org
Some content sources are: usatoday.com, energystar.gov