Tax Lawyer's Blog

Tucked into a corner of the Stimulus plan approved by Congress in February are tax incentives for homeowners to make their homes more energy efficient:

Uncle Sam is offering up to $1,500 in tax credit for energy-efficiency upgrades like new insulation and windows. The credits are worth 30 percent of the total cost for the upgrades. For example, if you spent $3,000 on eligible windows, you can get back $900.

Tax preparers may not be aware of these new provisions and how taxpayers can qualify for them. Taxpayers should visit the Tax Incentives Assistance Project for guidance.

Here  is a summary of the four categories of upgrades that will qualify for the green credits:

There are four types of upgrades that are covered. The first batch are home-shell improvements like insulation, windows and sealing. These are designed to make the home tighter and close up leaks.

The next batch are home heating, ventilating and air-conditioning, or HVAC. This includes efficient air-conditioners and furnaces.

A third batch is renewable energy technology like geothermal heat pumps, solar water heating, small wind generators and photovoltaic systems.

The last batch — and perhaps the most popular — are hybrid and diesel cars.

Here’s more on the new green provisions from the EPA website, Energy Star:

These changes apply to products “placed in service” in 2009. The highlights are:

• The tax credits that were previously effective for 2009, have been extended to 2010 as well.
• The tax credit has been raised from 10% to 30%.
• The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
• The maximum credit has been raised from $500 to $1,500 total for the two year period (2009-2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
• The $200 cap on windows has been removed, but the requirements for windows has been increased significantly.

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