Federal Tax Credits for Energy Efficiency

The Emergency Economic Stabilization Act of 2008 extends tax credits for energy efficient home improvements (windows, doors, roofs, insulation, HVAC, and non-solar water heaters) during 2009. Tax credits for solar energy systems and fuel cells are extended from 2009 to 2016 (a 30% credit applied to the bottom line of your taxes). New tax credits are established for small wind energy systems and plug-in hybrid electric vehicles. Tax credits for builders of new energy efficient homes and tax deductions for owners and designers of energy efficient commercial buildings are also extended.

Consumer Energy Tax Incentives
What the Economic Stabilization Bill Means to You--
from the Department of Energy Web Site on Tax Incentives

The recently passed Emergency Economic Stabilization Act of 2008 (P.L. 110-343) included, extended and/or amended many consumer tax incentives originally introduced in the Energy Policy Act of 2005 (EPACT). The bill also included tax incentives for businesses, utilities, and government. For a complete summary of the tax incentives included in the bill, read the summary of Energy Tax Incentives in The Emergency Economic Stabilization Act of 2008.

About Tax Credits
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.

Fuel-efficient vehicles and energy-efficient appliances and products provide many benefits such as better gas mileage – meaning lower gasoline costs, fewer emissions, lower energy bills, increased indoor comfort, and reduced air pollution.

In addition to federal tax incentives, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment. Each state’s energy office web site may have more information on specific state tax information.

Below is a summary of many of the tax credits available to consumers. Please see the ENERGY STAR®'s Federal Tax Credits for Energy Efficiency for complete details.

Home Energy Efficiency Improvement Tax Credits
Consumers who purchase and install specific products, such as energy-efficient windows, insulation, doors, roofs, and heating and cooling equipment in the home can receive a tax credit of up to $500 for improvements "placed in service" starting January 1, 2009 through December 31, 2009.
The ENERGY STAR® website has a complete summary of energy efficiency tax credits available to consumers.

Residential Renewable Energy Tax Credits
Consumers who install solar electric systems can receive a 30% tax credit for systems placed in service from January 1, 2006 through December 31, 2016; the previous tax credit cap of $2,000 no longer applies. In addition, consumers who install small wind systems can receive a tax credit up to $4,000. Geothermal heat pumps also qualify for tax credits up to $2,000.

Automobile Tax Credits
Individuals and businesses who buy or lease a new hybrid gas-electric car or truck are eligible for an income tax credit for vehicles “placed in service” after January 1, 2006 and purchased on or before December 31, 2010. The amount of the credit depends on the fuel economy, the weight of the vehicle, and whether the tax credit has been or is being phased out. Hybrid vehicles that use less gasoline than the average vehicle of similar weight and that meet an emissions standard qualify for the credit. There is a similar credit for alternative-fuel, diesel, and fuel-cell vehicles.

This tax credit will be phased out for each manufacturer once that company has sold 60,000 eligible vehicles. At that point, the tax credit for each company’s vehicles will be gradually reduced over the course of another year. Read the IRS's Summary of the Credit for Qualified Hybrid Vehicles for information on the status of specific vehicle eligibility.

If individuals and businesses buy more than one vehicle, they are eligible to receive a tax credit for each. If a tax-exempt organization buys such a vehicle, the retailer is also eligible to receive another credit. Companies that buy heavy-duty hybrid trucks are also eligible for a larger tax credit.

Consumers who purchase plug-in electric drive vehicles can also receive a tax credit. The credit for passenger vehicles and light trucks ranges from $2,500 to $7,500 based on the tax code formula.

Taxpayers may claim the full amount of the allowable credit up to the end of the first calendar quarter after the quarter in which the total number of qualified plug-in electric drive vehicles sold in the U.S. exceeds 250,000.

_{* Source: ENERGYSTAR.gov
** The IRS will determine final tax credit amounts. For more information as it becomes available, see www.energy.gov/taxbreaks.htm.}

_{See 2009 IRS Form 5695 Residential energy Efficient Property Credit
(2009 version available late 2009 or early 2010)}
 

There are many shades of green, and many levels of home energy efficiency. Today's new awareness of earth friendly construction techniques and products will have an effect on the future of our children and the communities they are left with. As your Personal Realtor an important part of my job is advising and guiding you through the home buying or home selling process. That includes helping you get the information and make the choices that are important to you.

Among the considerations for building GREEN are energy efficiency, resource conservation and material efficiency,
water efficiency, indoor environmental quality, site planning, preserving trees and open space, and providing access to nature, in an effort to minimize the effect that buildings have on our environment.
DEFINING GREEN BUILDING

For a list of mortgage lenders in the Rockford area and this weeks interest rate information --
see my weekly local mortgage rates update.

My blog: rockfordenergy-smarthomes.blogspot.com

If I can be of help to you in buying or selling a home, especially a green and energy efficient home,  please don't hesitate to call at 815-381-6850 or email.