2010 Home Improvement Tax Credits For Energy Efficient Products (Insulation, Windows, Heaters, Etc)

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. …

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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

Update: The tax credits will expire on 12/31/2010, but a new one has been passed. 2011 Home Improvement 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?

energystar

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 energy 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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Last Edited: 11th February 2014

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Comments

    Share Your Thoughts:

  1. says

    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!
    Paul @ Fiscalgeek´s last post ..Free Gift Wrapping Using Unconventional Materials

  2. Terri Blankenship says

    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?

  3. B. Thomas says

    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.

  4. Hector Chavez says

    I am Insulation contractor,
    what do I have to do to make my customers get the rebate or tax credit?

    Thanks,
    Hector

    • says

      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!

    • says

      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”.

      Click here

  5. Toni Brasseaux says

    I recenty purchased a complete home water filtration system costing $6000, would this qualify for the tax credit?

  6. Kathy says

    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)?

  7. D Reasons says

    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?

  8. Kathy says

    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.

  9. Joy says

    Is there any talk of extending the energy tax credit into 2011? We replaced all the windows in our 1920′s home this year and will be claiming that credit. However to pay off the windows aggressively to avoid interest, we really can’t afford to replace our water heater (not damaged or deficient, just old and needs replacing while the credit is in place.) I’m considering putting the water heater on our credit card before end of the year – the interest for three months should be smaller than the tax credit. Thoughts?

  10. Fred says

    I am planning on replacing my existing heating and cooling split system. I am thinking about installing a new high efficiency 95% AFUE gas furnace and a 13 SEER. air conditioning condensing unit.
    The cost of this installation was quoted at $6,000.
    I am able to apply for the tax credit because I will install the 95% eff. gas furnace, but will I be able to get the maximum tax credit since I will not install a 16 SEER condensing unit for A/C?
    Thanks for your input.

  11. John says

    I am on social security disability so I do not pay any income tax. We just had two new doors and two new windows installed . All of which energy star products. Is it still possible for me to get some kind of rebate?

      • says

        I believe you can only get the tax credit if you have a tax liability. From the government site:

        Is the tax credit non-refundable?
        Yes, the energy efficiency tax credits are “non-refundable” which means you can’t get more money back in tax credits than you pay in federal income taxes (your tax liability)

  12. Denise says

    I know every little bit helps but for me spending the extra money wasn’t worth it. My “energy efficient purchase” is not more than $500.00, but I think allowing the credit is great. But because I liked the doors style/look I got it anyway.

  13. Frances says

    I purchased an AC on july 2010 which meets the requirement for energy credit but i’ve been doing my income tax return and i’m getting $0 for energy credit. why is that so? is there a form that i should fill out first or my HVAC contractor to fill out in order to get the energy credit. btw, i don’t have any tax liabilities so i was thinking that i should get the full credit. thank you.

  14. Erie says

    My Mom needed a new furnance in 2010 – Her credit is not good so I had to finance the entire purchase; can I claim the energy credit on my taxes since the bill and financing is in my name? She is on disability and has no earned income; her tax refunds are sent directly to the IRS for payment on an IRA distribution she owes taxes on. I could sure use the credit to help offset the burden of this additional debt of the furnance that is now in my name. Blessings to you…..

  15. Rachel says

    My roof and back door were damaged in a tornado in 2010. We had them replaced via our homeowners insurance. I have an itemized list of all the materials used with prices. Can I claim that under this credit. If not, can I at least claim my $1000.00 deductible I paid towards it? Thanks

      • says

        I would think that you should be able to claim for any eligible items, the amount you paid towards them? The government site says the following on the FAQ:

        Can I get the tax credit if my new equipment is paid for by insurance?
        No – you can not get a tax credit for something you have not paid for. If insurance partially covers the equipment, then you may take the tax credit on the remaining portion that you paid.

        FAQ section

  16. Ron says

    I put $6000 worth of windows , furnace and blown in insulation into my home in 2010. I should recieve the total $1500 credit. Is that correct? My tax guy said that I would only get $215 because of some tax table. What is this all about? Please repond.

    • says

      Not sure what that’s about. Was your tax guy able to explain it to you? Was it in part because your tax liability wasn’t big enough? Only reason I can find on turbotax that people aren’t getting it on qualified items is because their tax liability isn’t big enough:

      Note: The credit can not be more than the tax you owe. Due to limits based on tax liability, other credits claimed by a particular taxpayer and other factors, actual tax savings will vary. These tax savings are on top of any energy savings that may result.

  17. Joann says

    March of 2010 we replaced a whole new roof which cost us $10,500. They removed the whole roof and installed aluminum drip edge along roof perimeter, installed ice and weather shield along roof perimeter, installed a 30 year warranty architechtural Timberline shingles and installed 2 10″ aluminum air vents. Am I qualified for this? Thank you for helping me out….

  18. Avery says

    We had 19 new energy efficient windows installed last year. The contract price was 6528 and the job was to be completed by 12/19/2010. I paid all but $1000 by years end.

    My basic question is: how to I determine what portion I can allocate to the windows themselves. I got a single bill for everything?

    Thank you

  19. says

    I owe 2853 in taxes this year snd I have 15,000. applicable to the Residential Enegy Credits yet My taxact figured it out using form 5695 that I get $0.00. Why would i not get the $1500.00 maximum…

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