Home Remodeling and Energy Tax Credits

Monday, July 27th, 2009 | Green Building, Home Remodeling
Efficient replacement windows in a home remodel can earn energy tax credits.

Energy efficient replacement windows in a home remodel can earn energy tax credits.

Conserving energy through the use of “green” products might not have been at the top of your list a few years ago, but thanks to the 2009 economic stimulus bill the government has made it financially beneficial to homeowners to work toward energy efficiency. Tax credits are available unlike ever before to homeowners who are planning a home remodel with green appliances and practices.

The 2009 economic stimulus bill improves upon pre-existing credits in a big way:

  • 2009 tax credits are now in effect until 2010
  • The 10% tax credit is now 30%
  • Tax credits that were once a specific amount are now converted to 30% of the cost of materials
  • The maximum credit is now $1500 instead of $500 and is for all improvements combined for the 2009-2010 period
  • Certain home improvements, including geothermal heat pumps, solar water heaters, and panels are not subject to the $1500 maximum

Asheville remodeling contractors such as Brock Builders can perform a home energy audit to outline the areas that will benefit most from installing energy-efficient appliances and insulation systems. By installing a variety of energy-efficient items from the following categories, you may be eligible to claim a tax credit of 30 percent:

  • Biomass stoves
  • Exterior doors, skylights and windows
  • HVAC
  • Roofing (metal and asphalt)
  • Storm doors and windows
  • Water heaters (nonsolar)

Tax credits are also available at 30% of the cost, with no upper limit through 2016 (for existing homes and new construction) for the following categories:

  • Fuel cells
  • Geothermal heat pumps
  • Solar panels
  • Solar water heaters
  • Small wind energy systems

The new tax credit does have a discrepancy, however, when it comes to windows. Energy Star windows purchased before June 1, 2009 are eligible for the tax credit of 30%, but not all Energy Star windows purchased after June 1 will qualify. To meet the requirements for the tax credit after June 1, the windows in your remodel must be super-efficient windows with a U-factor and solar heat gain coefficient (SHGC) less than or equal to .30. According to Energy Star’s website, most of their windows will not meet the requirements for the tax credit. These confusing standards are being reviewed by the American Architectural Manufacturers Association (AAMA), who are urging Congress to reconcile the stimulus bill standards with Energy Star criteria.

In order to qualify for the tax credit, all products must have a signed statement from the manufacturer certifying the product meets the standards for the tax credit. The Manufacturer Certification Statement isn’t required to send in with your tax return but must accompany your receipts and records. It is recommended by the National Association of Home Builders (NAHB) to save all receipts with the contact information of each manufacturer, the make and model of the product, and the manufacturer’s statement that the product meets the tax credit standards.

Whether you plan to do a basement, bath or kitchen remodel, hiring a general contractor familiar with these tax credits ensures your home remodel is earning the highest credits possible, the proper appliances and products are purchased and installed, and the specific records you need are organized. When helping the environment while saving money, everybody wins.

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3 Comments to Home Remodeling and Energy Tax Credits

July 30, 2009

It’s a great time to invest in geothermal heating and cooling technology. The American Recovery and Reinvestment Act of 2009 recently lifted the caps on tax credits to qualified geothermal heat pumps, which was previously set at $2000. Homeowners who install a geothermal ground loop or ground water geothermal heat pump qualify for this one time of up to 30% of the total investment, as long as the pump meets or exceeds EnergyStar requirements and installed after December 31, 2009. Business owners will receive a credit of 10% of the total investment. Units installed in 2008 are subject to a $2,000 cap, but those installed between 2009-2016 have no cap.

This substantial tax credit is just one of the many benefits of using geothermal technology to heat and cool your home. Geothermal systems use 25-50% less electricity than conventional systems. According to the EPA, geothermal pumps reduce energy consumption up to 44% compared to air-source heat pumps, and up to 72% compared to standard air-conditioning. In humid areas, like Florida, geothermal heat pumps improve humidity control by maintaining 50% relative indoor humidity.

But it’s not just the tax credit or energy savings that should peek your interest, geothermal heat pumps are also extremely durable and reliable. The underground piping carries warranties of 25-50 years, and the heat pumps are known to last twenty years of longer.

So, if you’re looking for a reliable system that will also give you tremendous savings on your energy bill over the long-run, a geothermal heat pump may just be what you’re looking for!

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