Firelands

New Tax Credits Offer Savings

Recent legislation in Washington, D.C., has given homeowners a chance to save even more by improving the energy efficiency of their house. Along with the cost-cutting experienced through reduced energy use of items such as energy-efficient replacement windows, a federal tax credit is available for qualifying home improvements. Installation costs are NOT covered by the tax credit for doors, insulation, roofs, and windows.

Tax credits are available at 30% of the cost, up to $1,500, in 2009 & 2010 (for existing homes only) for:

Tax credits are available at 30% of the cost, with no upper limit through 2016 (for existing homes & new construction) for:

Not all ENERGY STAR qualified homes and products qualify for a tax credit. These tax credits are available for a number of products at the highest efficiency levels, which typically cost much more than standard products. If, for whatever reason, you decide not to purchase a product covered by the tax credit, you may still consider purchasing an ENERGY STAR product. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.

Firelands' Energy Advisors have supplied a list of typical questions homeowners are asking regarding the new energy credits on windows:

Q: Is the $1,500 tax credit available for each improvement? Can I get $1,500 for windows and another $1,500 for a new HVAC system? Can I get 1,500 in 2009 and another $1,500 in 2010?
A: No, the $1,500* tax credit is a total combined credit for all tax years (2009 and 2010). So, basically you can spend up to $5,000 during this two-year
period on a single or multiple improvements, and get 30 percent or $1,500* back as a tax credit. If you get the entire $1,500 credit in 2009, then you can't get anything additional in 2010.

Q: Is there an advantage to purchasing energy-efficient windows for my home over other energy-efficient products, such as increased insulation or a heat pump?
A: Yes. Along with immediately helping to reduce your heating and cooling bills from the day they are installed, energy-efficient windows add to the beauty and curb appeal of your home. Vinyl windows also allow for low maintenance to make your life easier. Energy-efficient window replacements provide immediate added value to your home, your energy bills and your lifestyle.

Q: What are the details of the new consumer tax credit for qualified energy-efficient home improvements related to windows?
A: Under the new law, when taxpayers purchase replacement windows that meet specific energy efficiency requirements, they are eligible for 30 percent of the cost turned in as a tax credit. This credit is capped at $1,500 for the years of 2009 and 2010.

Q: Do I have to purchase ENERGY STAR-qualified windows to get the tax credit?
A: No. You should specifically ask for a U Factor of 0.30 (or below) and a SHGC of 0.30 (or below) when purchasing a window to qualify for the tax credit. These are different energy efficiency specifications than ENERGY STAR-qualified windows have.

Q: What are the restrictions of the tax credits?
A: This law has some very specific restrictions. It’s important to note the following:

1. Windows purchased must be equal to or below a U Factor of 0.30 and a Solar Heat Gain Coefficient (SHGC) of 0.30.
Note: These are NOT the same factors as ENERGY STAR® qualifications, so homeowners will need to specifically check on the U Factor and SHGC ratings of the windows ordered.
2. The purchase of the qualified windows must be made during the taxable year for which the credit is being claimed.
3. The tax credit is allowed only on the price of the qualified windows themselves, not on installation costs, on-site preparation, assembly or sales tax.
4. The tax credit is allowable only for qualified window units placed in service in 2009-2010.

Q: What is the time frame for this program?
A: The tax credit is provided for all qualified windows purchased and installed in 2009 and 2010. Unlike a tax deduction that only reduces the amount
of your taxable income, a tax credit reduces the amount of tax you owe.

Q: What kind of windows must I purchase to be eligible for this tax credit?
A: Energy-efficient windows that have a glasspackage equal to or below a U Factor of 0.30 and a Solar Heat Gain Coefficient (SHGC) of 0.30.

Q: What is a U Factor?
A: This is the amount of heat transferred through a material. The lower the Uvalue, the slower the rate of heat flow and the better the insulating quality of the window.

Q: What is Solar Heat Gain Coefficient (SHGC)?
A: SHGC is the percentage of heat gained from both direct sunlight and absorbed heat. The smaller the number, the greater the ability to reduce solar heat gain into the home.

For more energy-saving advice, visit our Energy Advisor page.