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2009 Federal Energy Tax Credits

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Energy Star LogoWhile many parts of of the Emergency Economic Stabilization Act of 2008 (or what some call the $700 billion bailout) probably upset you, one aspect that did make me smile was the reintroduction of energy tax credits. (You thought I was going to point out the extension to the provision that allowed racetracks to depreciate their tracks over 7 years rather than 15, huh?) The federal energy tax credit for energy efficiency was a benefit I took advantage of two years ago whenever we replaced our aging windows and sliding doors. While it’s great that the credits have returned, one unfortunate aspect is that the $500 credit limit will apply to 2006, 2007, and 2009. We won’t be able to take advantage again.

With home improvements, you have to place the home improvement in service after January 1st, 2009 and on or before December 31st, 2009. If you do anything between now and December 31st, 2008, you’ll be out of luck. I would review the Energy Star chart for the specifics of each improvement, how much you can get from the credit, before making any decisions but I’ll highlight the major ones.

The biggest bang for your buck is in the form of replacement windows and, to a certain extent, doors. For windows and skylights, you can get a credit for 10% of the cost, up to $200, for Energy Star qualified or IECC meeting windows. Labor is not included. For exterior doors, if they meet IECC standards, you can get a credit for 10% of the cost, up to $500.

Insulation is another good way to reduce energy costs without costing you a lot of money and they come with a 10% credit, up to $500. The only requirement is that they must be expected to last 5 years or have a 2 year warranty. One great place to check your insulation levels is in the attic, it’s important to have at least 12 inches of insulation. If you can see your joists, you need more insulation.

Finally, there are a few home improvements that are afforded energy credits. Compliant HVAC systems and water heaters can get a $300 credit. If you happen to live in an area with plenty of sun, solar systems can get 30% off, up to $2000 (there is no $2000 cap if is it’s a Photovoltaic system!), and are not subject to the $500 credit cap. While the credits probably aren’t enough to get you to install it, they are nice if you’ve already made the decision.

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10 Responses to “2009 Federal Energy Tax Credits”

  1. Neko says:

    While the credit is nice, I personally feel that the overall costs of upgrading your home to be energy efficient far outweighs the economic benefit. Why would you spend $5,000+ on upgrades to save $150-$100 a month?

    This credit is better for those who upgrade not for the energy efficiency benefits but out of good consious for decresing thier carbon footprint on the enviroment.

    - Neko

    • Nick says:

      Um simple economics would show that the upgrade would pay for itself in less than 5 years!

      $100X12 months = $1200 savings per years

      $1200X5yrs = $6000

  2. Jon says:

    If you save $150 a month for long enough, it seems like a good plan to me. Obviously if you plan on moving before you get your ROI it’s a bad plan, but why would anyone do that?

  3. Stacey says:

    The “placed in service” phrase confuses me; does it mean installed?

    We have energy-star windows that we bought in 2008, but never got around to installing – if they are “placed into service” in 2009, are we still eligible for the credit?

    It would be great if that was the case! We made the mistake of buying ALL our home improvement items at once with our stimulus check, and couldn’t install everything before it got so cold. :)

  4. F2O says:

    Neko – I agree that doing these improvements just for the energy cost savings can be silly. However, if the things being relpaced are old enough, it can make some sense. For example, I replaced a picture window that was original to my home (1952) this past summer. It was so old and leaky, that I could see the curtians blowing around in the winter. The $4000 that I spent on that window will reduce my energy bill proabably by about half, but more importantly I can now sit in that room without gloves. Not to mention, I was able to negotiate quite a bit off the cost of the house when I bought it because of that one window. When I sell, I won’t be trying to sell a house with an original single pane picture window, but one with a modern, dual pane, insualted glass bow window.

  5. Patrick says:

    This is a good tax credit in place. It gives an incentive to those that want to make a difference by reducing their energy use. Hopefully when I am able to save up enough money, I want to get a solar system to almost completely remove my dependency on my local electric company.

  6. Tim says:

    Using passive solar design at home is not about forking out thousands of dollars to fancy energy saving devices. It is about using the sun wisely to heat and light your home. Whether this means planting a deciduous tree that shades your home in summer, but let’s warm sunlight through in winter. Or replacing your windows for Low-E or double-glazed ones.

    Besides, when getting heat retaining windows all of them have different ratings and prices. So always take this into consideration – if you are in a warmer climate, you can get away with using cheaper lower grade Low-E windows, whereas in colder climates such as northern Canada, you’ll save more power in the long run by investing in more expensive higher grade Low-E windows.

    The unfortunate part about getting people to become more energy conscious is to offer them incentives. These the tax breaks offered are not there because the renewable energy solutions are expensive, but rather to coax people to change.

  7. GoGreenWindows says:

    2009 Stimulus Bill Tax Credit for Replacement Windows up to $1500

    RESTRICTIONS TO TAX CREDIT for Replacement Windows, Doors and Skylights – Energy Star no longer the qualification!!!
    Tax Credit for 2009 and 2010

    Windows, Doors, Skylights ONLY Qualify for the 30% Tax Credit up to $1500 if the windows are equal to or below a 0.30 U Factor and 0.30 SHGC If the window DO NOT meet these requirements and the homeowner will not get the Tax Credit. Homeowners need to spend more money for these types of energy efficient windows. Energy Star requirements do not apply for this Tax Credit. This replaces the $200 window and $300 door tax credit for 2009. If you have already done your windows hopefully they will qualify if they don’t you will be out of luck. Contact the Democratic Party to complain because they are the ones that put in the new qualifications. Looks like ONLY 30%-40% of windows currently meet the new requirements. Window dealers need to read the actual stimulus bill. Most windows sold today will not meet these requirements unless they are vinyl.

    Brands like Milgard Tuscany vinyl windows and doors and Amerimax vinyl windows and doors Do Meet the new requirements if the windows and doors are upgraded to Low-e366 and Argon and Milgard Tuscany needs Superspacer upgrade also. Check the dealers websites to see if a window qualifies or not. I am sure the ones that qualify will be marketing it.

    Brands that might not qualify. Pella, Anderson, Atrium, PlyGem, Amsco, Empire Pacific and many others.

    Here is a link to the 2009 Stimulus Bill. The $1,500 can be for other things too like a new water heater, furnace, water broiler, and insulation.

    pages 41-45

    http://i.cdn.turner.com/cnn/2009/…ulus.b.pdf

    Hope this helps.

  8. Don P. says:

    GoGreenWindows-the derogatory implication that Democrats are evil (I guess you would have no standards at all, eh?) by raising the standard is extremely lame.

    It appears that the incentive is to get the manufacturers to *push* the more efficient models, thereby lowering costs on the less efficient in an effort to stimulate sales, growth, and possibly even jobs.

    I am *sick* of hearing dolts of both sides fingerpointing in a lame attempt to “one up” the others.

    Stick to the point-this is a venue for energy savings-not your personal rant board against a differing view point.

    Back to the point-he IS correct in stating that the “Energy Star” label will NOT automatically qualify for the tax credits.. Check the specifications closely and MAKE SURE THE CONTRACTOR INCLUDES THE SPECS IN THE CONTRACT. If you then get burned, it will be on the contractor to make it right, and your dollars will remain with you.


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