As April 15th approaches, searching for tax deductions and credits becomes a priority in many people`s lives. Many of the credits provided in the American Reinvestment and Recovery Act of 2009 extend previous incentives for energy efficiency and renewable energy.
The list of incentives can provide reason enough to make home improvements that make sense. Provisions for Energy Star appliance credits can help offset the cost of much needed or wanted appliances, many of which can pay for themselves in energy savings. Refurbishing a home with energy efficient windows and doors while adding insulation improves the facade while reducing energy consumption. These improvements also qualify for tax credits.
Energy Efficiency Tax Credits
The IRS maintains a website, Energy Provisions of the American Recovery and Reinvestment Act of 2009, to help consumers and tax payers understand available credits. The U.S. Department of Energy publishes a similar site, Consumer Energy Tax Incentives. Many of the credits are for improvements in residential efficiency.
- Residential Energy Property Credit: This credit applies to improvements including new windows, insulation and efficient heating or cooling systems. Guidance has been given to manufacturers for labeling products that qualify, and the IRS site has the full rules. A credit of 30 percent of the cost of improvements with a maximum of $1500 is available.
- Not all EnergyStar products automatically qualify. Non-solar water heaters, roofing and doors can also qualify for this credit. The credit is a maximum of $1500 total for 2009 and 2010.
Renewable Energy Credits
- Residential Energy Efficient Property Credit: This credit applies to items placed in service after December 31, 2008. It is a 30 percent credit for qualifying items and has no upper limit. The credit also applies to installation costs.
- Geothermal heat pumps, the most efficient heating/cooling system available, qualify per restrictions.
- Small wind turbines with nameplate capacity of less than 100 kW qualify.
- Solar water heaters and photovoltaic systems qualify. More than half the property's energy must be provided by solar power. The system must be certified by a qualified state agency, and water must be used in the residence, not pools or hot tubs.
Electric Vehicle Credits
- Qualified Plug-in Electric Drive Motor Vehicles Credit: For vehicles purchased in 2009, this is a $2500 credit plus $417 for each kW-hour of battery capacity in excess of 4 kW-hours. The credit is subject to limits based on vehicle weight.
- Plug-in Electric Vehicle Credit: Some low-speed vehicles purchased between February 17, 2009 through January 1, 2012 qualify for up to a $2500 (10 percent of purchase price) credit if they meet the restrictions.
- Conversion Kits: Converting a vehicle to qualify as a Plug-in Electric Drive Motor Vehicle can qualify for credit of 10 percent up to $2500 if the vehicle is placed into service between February 17, 2009 and January 1, 2012.
Before claiming a credit, the provision with all of its restrictions should be well understood. Some of the credits have multiple restrictions, so a tax professional may be best able to determine which projects qualify for credits. If the credit is an important part of financing a project, consult with a tax professional before making a purchase. Many states and utilities offer incentives for energy projects as well.
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Justin Novak - I graduated from Michigan Technological University in December of 2007 with a Bachelors of Science in Mechanical Engineering. My ...
