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5/19/2009

Fort Worth, TX – An important feature of the recent economic stimulus package was the introduction of important changes in the tax incentives for homeowners who take measures to reduce total energy use and improve energy efficiency. This includes such items as windows, doors, insulation, appliances, and roofing. These items must meet certain standards in order to be eligible. For example, simply installing additional installation does not automatically mean a tax credit; the additional insulation must meet certain specifications. To earn the tax credits, the homeowners must meet certain qualifications. Homeowners are eligible for a tax credit of up to $1,500 for the two year period from January 1, 2009 to December 31, 2010. The $1,500 limit applies to the two-year term, not to each year. Those who install a geothermal system, solar panels, or small wind energy systems may be able to claim up to 30% of the installed costs in tax credits for the year the system goes into service; this tax credit also runs for a longer period: January 1, 2009 to December 31, 2016. Only the homeowner's primary residence is eligible for energy tax credits. Improvements for a second home cannot be claimed. The lifetime limit on claiming energy tax credits has been removed; homeowners who previously claimed tax credits in 2006 or 2007 are eligible for the full limit of $1,500 in 2009-2010. Homeowners can use the entire $1,500 limit as credit toward the installation of one appliance such as a qualified furnace, air conditioner, or heat pump. The tax credit applies to any installation cost, including labor. Improvements do not have to be made at the same time; any unused tax credit is available until the end of the two-year term on December 31, 2010. Under IRS rules, manufacturers are supposed to certify that certain specific products are eligible. Homeowners should obtain a copy of this certification from the manufacturer, installer, or retailer. You may wish to consult a tax advisor about eligibility before making final decisions about these improvements.

The question of whether certain measures qualify for the tax credit should make consumers cautious in responding to energy-saving advertising. Consumers should be wary of advertising that "guarantees" qualification for a tax credit. There will be the usual number of "free" offers to induce consumers to try to take advantage of the energy tax credits. One ad created the initial impression that its product came with $1,500 in energy tax credits. Another energy-related ad claimed that the company was a member of the BBB which it was not. For more information on energy tax credits, consult the federal government-run websites at www.energystar.gov/ and www.energy.gov/taxbreaks.htm. You may also want to consult http://energytaxincentives.org/, the website of the Tax Incentives Assistance Project, a coalition of nonprofit groups, government agencies, and other organizations in the energy-efficiency field.