Companies, industries, and individuals in the U.S. are wondering how the stimulus package will affect their bottom line, market, or wallet. Starting Feb. 17, when Congress approved the package -- officially known as the American Recovery and Reinvestment Act of 2009 -- association officials have been reviewing the 1,000-plus-page document for details. The remodeling industry is looking to the section of the act that promotes green jobs and energy independence. The energy-efficiency and conservation tax incentives under section 25C were expanded at the end of 2008, but have been further revised. The act offers the following incentives for homeowners that would benefit the remodeling industry:
Extends the tax code section 25C credit for energy-efficient home improvements through the end of 2010
Expands the list of eligible improvements, which now includes furnaces, energy-efficient windows and doors, insulation, and renewable energy such as geothermal heat pumps and solar
Increases the credit rate from 10% to 30%
Raises the lifetime cap from $500 to $1,500
In a press release, the National Association of Home Builders says congressional estimates indicate that the new rules for the tax incentive will increase aggregate remodeling activity by more than $6 billion. "The new tax credit also aligns with industry research indicating that even the most aggressive efficiency goals for new homes won't make a dent in overall energy consumption," said NAHB Remodelers chairman Greg Miedema in the release. "Instead, remodeling and retrofitting the nation's older homes is by far the more efficient solution."
Dan Taddei, director of education for the National Association of the Remodeling Industry, says that the real challenge is to see if homeowners will weigh the credits against utility bill savings and decide to borrow money to make energy-efficient improvements. He says that remodelers should educate themselves about the details of the tax incentive before approaching homeowners. Besides the federal credit, they should review state and utility rebates and credits. “As energy prices go back up, we’ll need to see more of these types of weatherization improvements -- HVAC, water heating, etc., ... Methods to reduce the cost of these items will be important,” he says.
For a list of eligible items click here.
For state and local credits and rebates, visit www.dsireusa.org.
Homeowners should keep manufacturer information and other details about the improvements and file IRS Tax Form 5695 with their taxes.