Getting Credit for Good Decisions

As one of our economically savvy customers recently pointed out, your home may be your best investment these days. While CDs and savings accounts are paying only meager returns and the stock market is still in its “volatile” state, improving your home is nothing but win-win all around.

The new stimulus bill signed by President Obama on February 17th of this year included some updates for energy efficiency improvements on existing homes. All of the credits available for 2009 have been extended into 2010 and the credit amount has been raised from 10% to 30% up to a maximum of $1,500. The previous cap was $500. So, basically you can spend up to $5,000 during that 2 year period, and get 30% or $1,500 back as a tax credit.

The products covered under the new bill are limited to:

Windows, Skylights and Doors (including French Doors and Sliding Glass Patio Doors) –The minimum efficiency requirements increased significantly for all of these, so be sure you understand what you need before you start shopping.
Insulation
Roofs (Metal and Asphalt)
HVAC (including installation costs)
Water Heaters (non-solar) (including installation costs)
Biomass Stoves

To claim the credit, products must be “placed in service” in a principal residence between January 1, 2009 and December 31, 2010 and must conform to certain efficiency standards (see the Energy Star website for product details). Each product must have a Manufacturer Certification Statement (available from the manufacturer or their website) to qualify. Consumers won’t need to file the Certification Statement with the IRS tax form 5695 but are encouraged to keep a copy with their tax records in case they are ever interrogated. I mean audited.

Remember – the new credits come along with some new rules and deadlines. Be sure to check that the product you are buying qualifies for the tax credit – not all Energy Star products meet the minimum qualifications. Call the manufacturer before you buy! It’s always best to consult with a CPA if you have any other questions about how the tax credit applies to you.

For specific information on efficiency standards for each product, visit the Energy Star website.

This blog was written for Paul LaGrange’s BuildWrite website and was originally posted on March 13, 2009.

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