The down economy is effecting everyone, but some homeowners may get a small break if they make some upgrades around the house.
In early October, President Bush signed into law the Emergency Economic Stabilization Act of 2008. In addition to approving the $700 billion bank bailout and buying up bad mortgages, the Act renews tax credits for energy-saving home improvements, such as installing energy-efficient windows, insulation, solar energy, and more.
There is, however, a catch. Most of the original tax breaks were included in the Energy Policy Act of 2005 and expired at the end of 2007. The new legislation is applicable to improvements made during 2009. That means all the drafty windows and leaky water heaters that were replaced this year are not eligible for the incentive. Still, remodelers have several weeks’ head start to entice potential clients into begin new incentive-eligible projects in the coming year. According to Energy Star, here are some of the breaks taxpayers can benefit from in 2009:
Home Improvements. Home improvement tax credits are available for improvements “placed in service” from Jan. 1, 2009 through Dec. 31, 2009, and are available for insulation, replacement windows, non-solar water heaters, and certain high-efficiency heating and cooling equipment. The maximum amount that a taxplayer may claim from all of these tax credits combined is $500 over the lifetime of the tax credit (2006, 2007, and 2009). Get more details about which types of products are eligible from this chart on the Energy Star Web site.
- New Homes. If you’re building a new home, tax credits for “eligible building envelope components” (windows, doors, insulation, roofs) or “qualified energy property” (HVAC & non-solar water heaters) do not apply. However, the tax credit for photovoltaics, solar water heaters, small wind systems and fuel cells is available for homeowners building new homes. Learn more here.
- Solar Energy Systems. Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems “placed in service” from January 1, 2006 through December 31, 2016. The tax credit is for 30% of the cost of the system, up to $2,000. After December 31, 2008, this $2,000 cap will be removed for photovoltaic systems, but not solar water heaters. This credit is completely separate from the $500 home improvement credit.
- Small Wind Energy Systems. Tax credits are available to homeowners who install residential small wind turbine systems. The credits are available for systems placed in service from January 1, 2008 to December 31, 2016. The tax credit is for 30% of the cost of the system, up to $500 for each half-kilowatt of capacity with an overall maximum of $4,000.