Reduce Home Energy Costs AND Taxes – New Federal Energy Efficiency Credits Available in 2009
Washington, D.C., October 27, 2008 – New energy efficiency tax credits will allow homeowners to lower both their monthly home energy bills and their federal income taxes in 2009 as they contend with escalating winter energy prices, the Alliance to Save Energy said. Using the tax credits of up to $500 to make specific energy efficiency home improvements also can make homes more comfortable and reduce air pollution and greenhouse gas emissions, the Alliance noted.
The tax credits were enacted as part of the Emergency Economic Stabilization Act of 2008 (H.R. 1424), which the president signed on October 3, 2008. They are largely the same as those that were in effect in 2006 and 2007, with some new criteria for qualifying products and equipment. Details are on the Alliance to Save Energy website.
The Alliance consulted the Internal Revenue Service to confirm that taxpayers who claimed less than the total $500 credit in 2006 and/or 2007 can claim the unused portion in 2009. However, the Alliance strongly urges taxpayers who want to file for part or all of the new energy tax credits to consult their own tax advisors for specific advice.
“The Alliance worked very hard to ensure that Congress would renew the expired federal tax credits for energy efficiency home improvements, and we are pleased that homeowners can once again get some help from Uncle Sam to make their homes more energy efficient and more comfortable,” said Alliance President Kateri Callahan.
“With prices for winter heating fuels going up again this winter, and total 2008 home energy costs reaching about $2,350 for the average U.S. household, these new tax credits provide multiple benefits for consumers,” Callahan continued. “For example, qualified insulation and sealing materials reduce drafts and cold spots, while keeping precious warmed air inside. And the less energy used in the home, the less global warming pollution will be spewed into the atmosphere.”
The overall $500 cap can be reached in several ways with the purchase and installation of energy-efficient products:
- Insulation, exterior doors, or roofs: 10 percent of the cost of the product (but not the installation), up to $500. Includes seals to limit air infiltration, such as caulk, weather stripping, and foam sealants, as well as storm doors. Roofs must be ENERGY STAR qualified metal roofs with pigmented coatings or ENERGY STAR qualified asphalt roofs with cooling granules.
- Central air conditioner, heat pump, water heater, or bio gas (e.g. corn) stove: up to $300 towards the full purchase price, including installation cost. Heating and cooling equipment, including water heaters, must meet stringent efficiency requirements – not even all ENERGY STAR products will qualify. (Detailed criteria are on the Alliance website, www.ase.org/taxcredits.)
- Exterior windows: 10 percent of the total cost, up to $200. Includes skylights and storm windows. All ENERGY STAR qualified windows are eligible. Windows, doors, and insulation must meet the regional requirements of the 2001 or 2004 International Energy Conservation Code, a model energy code for buildings.
- Furnace or boiler: up to $150 towards the full purchase price, and/or $50 for an efficient air-circulating furnace fan, including installation cost.
- In addition, windows, doors, insulation, and roofs must be expected to last at least five years (a two-year warranty is sufficient to demonstrate this).
There also is a separate credit, through 2016, for ENERGY STAR qualified geothermal heat pumps – 30 percent of the cost, up to $2,000.
Manufacturers can certify (in packaging or on the company’s web site) which of their products qualify for the tax credit. Retailers, contractors, and manufacturers should be able to help consumers determine what levels of insulation and what other products qualify.
All improvements must be installed in or on the taxpayer’s principal residence in the United States. Condo and co-op improvements are apportioned to the owners. The credit cannot be taken against the Alternative Minimum Tax (AMT).