American Recovery and Reinvestment Act of 2009

In February, President Obama signed the American Recovery and Reinvestment Act of 2009, better known as the economic stimulus package. The bill makes some significant changes to the tax credits that are available to homeowners who make energy-efficient improvements in 2009 and 2010.

Some of these changes include:
The percentage of the cost of the upgrades allowable as tax credits has been raised from 10 to 30 percent.

Tax credits that were limited to specific dollar amounts have now been changed to 30 percent of the cost of the upgrades.

The maximum dollar amount for improvements per homeowner for the year has been raised from $500 to $1,500.

Items that are eligible for the tax break are:
Exterior windows, skylights, storm windows, and doors. These items must have a U factor (the ability of the product to prevent heat from escaping) of <= 0.30 and a Solar Heat Gain Coefficient, or SHGC (the amount of solar heat that a product allows in), of <= 0.30. Eligibility can vary based on features and by climate zone.

Metal or Asphalt Roofing. Must have an Energy Star rating to qualify. The roofing material must be expected to last at least five years or must come with a minimum 2-year warranty.

Insulation. Certain types of insulation qualify for the tax break; however, insulated siding does not qualify. The main function of the product must be to insulate, and the product must have at least a 5-year lifespan or come with a 2-year warranty.

Other items that may qualify within certain guidelines include:
– Central air conditioning and heat pumps
– Furnaces
– Hot water heaters or boilers
– Photovoltaic solar panels
– Wind energy systems

Specific efficiency levels must be met, so not all Energy Star items qualify for the tax break. Only those with higher energy efficiency ratings are eligible. The $1,500 maximum is cumulative for ALL improvements. So, if you install approved windows and a new water heater this year and 30 percent of the cost of both improvements is $1,700, you will only be able to claim a total of $1,500.

Strict regulations dictate which systems are eligible for the tax break. All items and/or systems must be installed between January 1, 2009, and December 31, 2010, and must be in the homeowner’s principal residence to qualify. If you own commercial property, additional deductions are available for commercial buildings.

For specific information about all of the home improvement credits that are available, visit Energy Star and click the Tax Credits for Energy Efficiency button. Remember to save receipts and the Manufacturer’s Certification Statement. For new windows, keep the Energy Star label. You will need these items when filing your taxes.

If you’re thinking about making some home improvements, the timing couldn’t be better. Contact your home improvement contractor for more information.

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