Kangaroo Building Services - Home Energy Tax Credits Dallas-Fort Worth

Resources

Summary Maps
Summary Tables
Library
Search
Whats New?

Federal
Incentives/Policies for Renewables & Efficiency

Residential Energy Efficiency Tax Credit

Last DSIRE Review: 12/17/2010
Program Overview:

State:	Federal
Incentive Type:	Personal Tax Credit
Eligible Efficiency Technologies:	Water Heaters, Furnaces , Boilers, Heat pumps, Central Air conditioners, Building Insulation, Windows, Doors, Roofs, Circulating fans used in a qualifying furnace
Eligible Renewable/Other Technologies:	Biomass, Stoves that use qualified biomass fuel
Applicable Sectors:	Residential
Amount:	2010: 30% 2011: varies
Maximum Incentive:	Aggregate amount of credit for all technologies placed in service in 2009 and 2010 combined is limited to $1,500
Equipment Requirements:	Equipment must be new and in compliance with all applicable performance and safety standards as described in tax code
Start Date:	1/1/2006
Expiration Date:	12/31/2011
Web Site:	http://www.energystar.gov/taxcredits
Authority 1: Date Enacted: Date Effective: Expiration Date:	26 USC Â§ 25C 8/8/2005 (subsequently amended) 1/1/2006 12/31/2010
Authority 2:	IRS Form 5695 & Instructions: Residential Energy Credits
Authority 3: Date Enacted:	HR 4853 12/17/2010

Summary:
This tax credit was amended and extended through December 31, 2011 by the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. The information presently on this page describes the credit as it existed for 2010. On January 1, 2011 several characteristics of this credit will change from their current form. Most significantly, the cap will be reduced from $1,500 to $500. The cap is on the total amount of credits a homeowner may claim between 2006 and 2011, not just for 2011. If a homeowner has already claimed $500 or more in credit through this allowance, they will be unable to claim new credits for improvements made during 2011.

The federal tax credit for energy-efficient home improvements was established by the Energy Policy Act of 2005. After expiring December 31, 2007, the credit was extended and expanded by The Energy Improvement and Extension Act of 2008 (H.R. 1424: Div. B, Sec. 302) and The American Recovery and Reinvestment Act of 2009 (H.R. 1: Div. B, Sec. 1121). The credit now applies to eligible equipment purchased between January 1, 2009, and December 31, 2010. In addition to extending the credit, H.R. 1424 and H.R. 1 strengthened the efficiency requirements for most equipment, extended the credit to stoves that use biomass fuel and asphalt roofs with appropriate cooling granules; raised the cap for the credit; and redesigned the way the credit is calculated.

The credit applies to energy efficiency improvements in the building envelope of existing homes and for the purchase of high-efficiency heating, cooling and water-heating equipment. Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence. The maximum amount of homeowner credit for all improvements combined is $1,500 for equipment purchased during the two-year period of 2009 and 2010.

Building Envelope Improvements
Owners of existing homes receive a tax credit worth 30% of the cost of upgrading the efficiency of the building's envelope. Installation (labor) costs are not included. The following improvements are eligible for the tax credit:

Insulation materials and systems designed to reduce a home's heat loss or gain
Exterior doors and windows (including skylights) and
Pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules.

Heating, Cooling and Water-Heating Equipment
Taxpayers who purchase qualified residential energy-efficient property are eligible for a tax credit worth 30% of the system cost, including labor costs. The credit may also be applied to labor costs for assembly and original installation of eligible property. The following types of equipment are eligible:

Electric heat pump water heaters
Electric heat pumps
Central air conditioners
Natural gas, propane or oil water heaters
Natural gas, propane or oil furnace or hot water boilers
Advanced main air circulating fans
Biomass stoves that use "plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers"

Performance and quality standards for tax credit eligibility vary by technology. (See 26 USC Â§ 25C, H.R. 1424 of 2008 and H.R. 1 of 2009) for details. Additionally, the Energy Star web site offers detailed information on qualifying products, and IRS Notice 2009-53 provides more details.

Significantly, The American Recovery and Reinvestment Act of 2009 repealed a previous limitation on the use of the credit for eligible projects also supported by "subsidized energy financing." For projects placed in service after December 31, 2008, this limitation no longer applies. Businesses that receive other incentives are advised to consult with a tax professional regarding how to calculate this federal tax credit.

Background
The Energy Policy Act of 2005 established the tax credit for energy improvements to existing homes. The credit was originally limited to purchases made in 2006 and 2007, with an aggregate cap of $500 for all qualifying purchases made in these two years combined. There were also separate individual caps for the different equipment types. H.R. 1424 of 2008 reinstated the credit for 2009 purchases and made other minor adjustments. H.R. 1 further extended the credit to include purchases made in 2010 and replaced the $500 aggregate cap with a $1,500 aggregate cap for installations made in 2009 and 2010. Tax credits for installations made in 2006 and 2007 are still limited to $500. Any purchase made in 2008 is not eligible for this tax credit.

Geothermal heat pumps were originally eligible for this credit, with a $300 cap. However, geothermal heat pumps are now eligible for the residential renewable energy tax credit, with no cap.

Contact:

Public Information - IRS
U.S. Internal Revenue Service
1111 Constitution Avenue, N.W.
Washington, DC 20224
Phone: (800) 829-1040
Web Site: http://www.irs.gov

Disclaimer: The information presented on the DSIRE web site provides an unofficial overview of financial incentives and other policies. It does not constitute professional tax advice or other professional financial guidance, and it should not be used as the only source of information when making purchasing decisions, investment decisions or tax decisions, or when executing other binding agreements. Please refer to the individual contact provided below each summary to verify that a specific financial incentive or other policy applies to your project.

While the DSIRE staff strives to provide the best information possible, the DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council make no representations or warranties, either express or implied, concerning the accuracy, completeness, reliability or suitability of the information. The DSIRE staff, the N.C. Solar Center, N.C. State University and the Interstate Renewable Energy Council disclaim all liability of any kind arising out of your use or misuse of the information contained or referenced on DSIRE Web pages.