Congress has extended energy efficiency tax credits for most homeowners through the end of 2010, so if you’ve been looking to upgrade your water heater or windows and doors, you can probably still get a tax credit in the coming year. Some less common of the tax credits for home improvements will be around all the way until 2016. From EnergyStar.gov
If you purchase an energy-efficient product or renewable energy system for your home, you may be eligible for a federal tax credit. …
Please note, not all ENERGY STAR qualified products qualify for a tax credit. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit
Energy Tax Credits Extended Through 12/31/2010
So how much is the tax credit, and how do you get it?
- Tax Credit: 30% of cost of the home improvement, up to $1,500
- Expires: December 31, 2010
- Provisions: Must be on an existing home & your principal residence. New construction and rentals don’t qualify. (Remember this is a “home improvement” tax credit!)
So what does this mean? For any qualified upgrade, the tax credit is 30% of the covered cost up to a $1500 total credit. For instance, if you pay $4000 for a central air conditioning system (excluding installation costs), your credit would be $1200.
The house must be your principal residence and the credits don’t apply to new construction. Other, upgrade-specific restrictions apply, so see the government site for details.
What Energy Efficient Products Are Eligible For The Tax Credit?
A variety of products are eligible for the tax credit, however, you need to be careful that your specific product is eligible. Some of the products include:
- Energy efficient doors and windows. Installation costs are not eligible for the credit. Other restrictions apply.
- Water Heaters. Credit includes installation costs; some restrictions for energy efficiency apply.
- Insulation, whether spray foam, fiberglass, or blow-in cellulose, they’re all covered so long as they meet IECC requirements. Installation cost is NOT covered.
- HVAC components, including advanced air handlers, air force heat pumps, central A/C units, boilers, propane, and gas furnaces. Tax credits include installation costs.
- Biomass Stoves.
- Metal and asphalt roofs. Credit doesn’t include installation costs.
Some of the tax credits will take into account installation costs, while other credits do not. To find out if your product is included, and whether you can include installation costs, check the government site here.
How Do I Apply For The Tax Credit?
To claim the energy efficient products tax credit, you’ll need to claim the credit on your 2009 or 2010 taxes.
For products “placed in service” in 2009, you need to file the 2009 IRS Form 5695 and submit it with your 2009 taxes (by April 15, 2010). Currently, only a DRAFT version of the 2009 IRS Form 5695 is available (without the instructions section). The final 2009 IRS form will be available in late 2009/early 2010.
So to claim the credit in 2010, the product will have to be placed in service in 2010. Same for the 2009 credits. 2009 Federal Income Tax Brackets for your reference.
Frequently Asked Questions (FAQ) About The Tax Credit
Here are the answers to a few of the most frequently asked questions about the credit.
- Is the $1,500 tax credit available for each product? Can I get $1,500 for windows and another $1,500 for a new HVAC system? Can I get $1,500 in 2009 and another $1,500 in 2010? Can two people living in the same home both get the $1,500 credit? Even if you purchase multiple products you can only get a maximum of $1,500 over the 2-year period (2009 & 2010). Basically you can spend up to $5,000 during this 2 year period on a single or multiple products, for your principal residence that you own and live in, and get 30% or $1,500 (30% of $5,000 = $1,500) back as a tax credit. If you get the entire $1,500 credit in 2009, then you can’t get anything additional in 2010. (Note: the maximum does not apply to all products)
- Can the energy efficiency tax credit be carried over to future years? The tax credit for products at 30% up to $1,500 can not be carried over to future years. But you can take part of the $1,500 in 2009, and the rest in 2010. A few select products that are not subject to the $1500 limit can be carried forward. Find details here.
- Is there an income limit on the tax credit? No, there is no upper or lower limit on the credit, however, these energy efficiency tax credits are technically “non-refundable.” If you don’t pay any taxes, then you can’t get the credit. Details here.
Are you planning on installing a new roof or water heater or other eligible product? Do you plan to claim the credit next year? Do you think the credit makes it worth it to install a new energy efficient product, or will you still hold off? Tell us your thoughts in the comments!
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I’ve often thought about replacing our windows in our 1980 split level home but just can’t stomach the costs. I’ve been quoted about $16,000 to do the work even if it cuts my heating bill to nothing it would take almost 9 years to come out ahead. Maybe some of the smaller ideas might make sense.
I had to lookup what a biomass stove was and then realized it’s a pellet stove. Thanks for keeping us up to date with all of the government stimulus programs Pete and Merry Christmas!
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Does a new energy efficient garage door qualify for tax credit?
Thank You,
Dan
Not sure, the details about that part of the credit are here, but I don’t see specific guidance:
Windows And Doors Tax Credit
I would suggest contactingn the IRS for specific advice on your situation.
I recently had to have anchors installed in my poured basement. This resulted in flooding of my basement, with subsequent mold development. The cost was $3500. Is any of this a tax credit for 2009?
Do Levolor 7/16″ double cellular blinds quailfy for a tax credit?
I don’t see anything about blinds qualifying. I would contact the IRS for specific guidance.
During 2009 I had a sunporch ($5900)installed and have taken the $1500 tax credit for that. In 2010 I had new windows installed in the remainder of the house ($8800). Can I take the $1500 credit on my 2010 tax return.
Thank you.
Please see the answer to your question in the FAQ above.
I am Insulation contractor,
what do I have to do to make my customers get the rebate or tax credit?
Thanks,
Hector
You would need to provide your customers with information regarding the tax credit so that they can claim it come tax time. You may want to include it in your advertising, and have handouts explaining the details.
Good luck!
I am having aluminum siding put on my house, does that qualify for the tax credit?
I don’t believe it does. Some insulation would be covered, but on one government site it said that for example, “insulated siding would not be covered”.
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I recenty purchased a complete home water filtration system costing $6000, would this qualify for the tax credit?
I understand that adding solar, fuel cell, or wind energy to my home is elegible for 30% credit, with no upper limit, through 2016. I will be replacing my a/c and heater this year, and plan on claiming the $1500 tax credit on my 2010 taxes. If I add solar to my home in 2011, have I already used up my tax credit with my a/c, or is the solar credit separate (since it has no upper limit)?
We will be replacing private residence roof in 2010. Asphalt Roof replacement qualifies for the credit. Does any asphalt roof material with Energy Star rating qualify? If not, where can I find the type of asphalt materials included in the credit?
I replaced my roof for a metal roof in 2008, but could not get any rebate in 2009 tax return, why?
Thank you Peter for the informative article! We are planning to have 6 windows (small home) and a water heater installed by the end of 2010. The tax credit helped us to make the decision to have this work done. We had no idea before reading your article that the installation of the windows wasn’t covered. Also your article made us realize that the water heater was included in the credit. So by doing either improvement ( or both) we should get the full credit.