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| Have you been considering doing some home improvements, but have been procrastinating? Have you been wanting to get more involved in the “green” movement? Well now is the time. With the revision to the tax bill in 2009, there are more reasons than ever to look at doing some home improvements. A new bill was put in place on February 17th of this year. The official name, The American Recovery and Reinvestment Act of 2009, has significant changes from the old energy bill. The prior bill allowed only a 10% tax credit on specific home improvement projects. The new bill allows a 30% tax credit on these same projects up to $1500 for the two-year period of 2009-2010. That amount was raised from $500. Under the old law, certain projects allowed only a tax credit of a certain dollar amount. That has been changed to the 30% tax credit as well. In addition, there are some larger projects that are eligible for a 30% tax credit without the $1500 limit. These projects include: Geothermal heat pumps, solar panels, solar water heaters, small wind energy systems, and fuel cells. Of course, that doesn’t mean you can just choose any system. You must make sure that the products you choose meet the specific energy requirements and are Energy Star-rated. So what does Energy Star mean? According to their Web site, www.energystar.gov, it is a joint project with the U.S. Environment Protection Agency (EPA) and the U.S. Department of Energy. What the Energy Star logo means to the consumer is that we can buy products with this logo and be confident that they are energy-efficient and meet strict guidelines set by the EPA. While it would be great if we could all run out and buy all new Energy Star products and do all these big projects to our homes, it is probably not feasible. The good news is that there are many other products that we may need anyway just to keep up the maintenance on our homes. The other bonus is that these things should also help lower your utility bills. So what other projects might you consider? What about replacing your windows and doors? Not only will this add to the aesthetic appeal of your home, but I know from personal experience that my utility bills went down when we replaced our windows. Unfortunately for me it was before this tax credit. The one thing you need to look out for is that not all windows and doors qualify for this tax credit. In fact, not even all the Energy Star windows qualify. To qualify for the credit, the doors and windows you install must meet specific Energy Star ratings. In addition, the requirements for windows and skylights put in after June 1st of this year have changed from previous requirements. It will now take a U-factor and SHHC (Solar Heat Gain Coefficient) that are less than or equal to 0.30 to qualify. It is very important to check that out before you make your purchase. One of the projects on the list that I would never have thought of is adding insulation. Again, you have to be careful. The law states that the insulation has to have the primary purpose of insulating. While you would think that that’s a no-brainer, actually the insulation they put in with siding does not qualify. Specific types of roofs also qualify. As with other purchases, they need to be Energy Star-rated, and metal and asphalt roofs seem to be the only types that qualify. The roof must also have a two-year warranty or be expected to last five years. So another big area that most people could benefit from is HVAC. This covers central air-conditioning systems, air source heat pumps, and natural gas or propane furnaces, among a few other choices. Once again, there are caveats and not all products are covered. Before making your selection, consider visiting the Consortium for Energy Efficiency product directory at www.ceedirectory.org. This will give you a listing of the products that will qualify for the tax credit. Water heaters are also on the list of qualifying purchases. This one can be a little tricky. The solar water heaters, as mentioned above, fall into the category of the 30% with no limit on the credit. However, for most of us, we may opt for a different type of water heater. If you choose an electric heat pump water heater, anything that has the Energy Star logo on it will qualify. The same is true of any Energy Star gas tankless water heater. As of today, there aren’t any gas storage tank water heaters that qualify for Energy Star. The other great thing about making these updates to your home is that many utility companies are offering rebates and credits. Of course, you would have to talk with your utility company to see whether they offer anything like that. So now that you have decided to make the purchase, how do you make sure you get the tax credit? Here are a couple of key things to keep in mind. Of course, you need to look for the Energy Star symbol. Make sure everything you purchase is meant to last for at least five years. Why waste the money on something that won’t last anyway? Make sure you save your receipt and your warranty. Again, check with the Energy Star Web site to make sure your purchase qualifies. Some items also need a two-year warranty. There is a lot to know about this new tax credit. When looking to purchase and have one of these products installed, make sure you have all your facts. Consider calling two or three companies to get estimates. Remember that cheaper doesn’t always mean better. The professional you choose should be able to give you more information about the new tax credit and help you make sure that your purchase will qualify. No matter what project you choose, you can be assured that the benefits will be many. So go out and do a little research of your own and figure out what fits best in your plans for home improvements. Sources for this story included: www.energystar.gov, www.consumerismcommentary.com, and www.ceedirectory.org. |
Energy Tax Credits |
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