If you’re planning on updating one of the major components in your house that affect energy efficiency, consider purchasing something that meets high enough requirements to earn you a tax credit.
It’s becoming common sense that if you are choosing a new appliance or even lightbulbs, that you’ll want to pick those labeled Energy Star for the most efficiency.
Well, there’s also components like windows, heat pumps, furnaces, insulation and others that can have the energy star rating (of different degrees). And if you’re willing to figure out the details when choosing your products, you can qualify for tax credits on these items for your Federal tax return.
These extended tax credits were initiated as part of the Stimulus package and its green incentives.
First thing you should do if you’re considering replacing one of these items is find a good contractor of vendor. I have personally had several of these things done in the last year, and have great recommendations. There are very specific rules for the tax credits, so you want to work with someone who can help you figure it out.
If you like details and want to read some, we found our information here in a handy chart. It gets quite complicated, but if you’re only looking at something simple like upgrading windows or roofing, it’s really pretty straightforward.
For example: for exterior windows installed after June 1, 2009 (which, unless you got windows between February and June, applies to your new window purchase) “must have U-factor and Solar Heat Gain Coefficient (SHGC) ratings of 0.30 or less. These ratings must be certified by the National Fenestration Rating Council (NFRC).”
Look for a label that says NFRC, and just ask your vendor about these ratings. (Example at right.) He/she should know those details.
In order to use your purchase to gain the tax credit, the windows must be installed in your primary residence, and you must have a “manufacturer certification statement.” If the vendor can’t supply it, it might be on the manufacturer’s website. Presumably, you’d also need your receipts.
Here’s some more info (from our chart):
Roofing: All Energy Star qualified roofing is eligible.
Insulation: Eligible if it meets 2009 IECC and amendments, and must primary purpose must be to insulate – for example, insulated siding doesn’t count.
To read more about requirements for AC, heat pumps, furnaces, etc., check the chart.
Now, you can only qualify for a total of 30% of cost or 1,500 over the two year period. Basically, if you spend $5,000 in qualifying energy efficient upgrades in a two year period, you can get $1,500 back as credit on your taxes for the year you spend the money. (More.)
It’s not the most lucrative tax credit in the world, BUT if you’re installing new windows (or roofing or insulation) anyway, why not go for the most energy efficient model — it can earn you the credit and save you the maximum in heating and cooling as well.
But, please don’t rely solely on this blog entry! Interview the vendor or contractor about the products they offer and double and triple check the tax info and/or talk with an accountant you trust. We found lots of cases online of people complaining that they failed to buy the right product rated for the credit.
If you’re in the area, let me know if you need help finding just the right person or company for a job like this. I am always happy to refer you to contractors I trust.
While this stuff can be complicated, it is a great incentive to pick the most energy efficient products for your home. Remember, the credit is not the only savings you would see by installing these high efficiency products. They cost more, but can save HUGE on energy bills in the future. Windows, roofing, heat pumps/AC etc… these are not the best products on which to cut corners, and it is nice to have an incentive beyond energy savings to buy the best!