Energy Efficient Property Credit

Dear Client,

Congress has greatly enhanced income tax credits for a host of energy efficient improvements to your home. Some of these credits are available for 2009 and 2010 and others are available through 2016.

In addition to income tax credits, there are some very attractive financial incentives offered by state and local governments as well as public utilities.

Before proceeding with a discussion of the available credits, we must provide a caution! It is not sufficient to simply buy "energy efficient" assets or even "Energy Star" assets; qualifying assets must meet certain technical standards of efficiency. Not only are the standards highly technical, in the case of different kinds of assets the standards are set by different agencies. These standards are beyond our professional expertise and we urge you to do your own cautious research. We have provided some useful links below which you can use to start that research.

Nonbusiness Energy Efficient Property Credit

A credit is available for expenditures made in 2009 and 2010. It is 30% of the cost of qualifying property up to an aggregate credit of $1,500 for 2009 and 2010 combined.

Eligible expenditures include installation costs. The property must be installed in your principal residence.

Qualifying property includes the following items that meet applicable efficiency standards:
  • A qualified natural gas, propane or oil furnace, or hot water boiler;
  • An advanced main air circulating fan;
  • Energy efficient building property including insulation, windows (including skylights), exterior doors, and certain metal or asphalt roofs.

Residential Energy Efficient Property Credit

A 30% unlimited credit is available for the cost of the following:
  • Solar electric property;
  • Solar water heating property;
  • Geothermal heat pump property;
  • Fuel cell property;
  • Certain small wind energy property.

Eligible expenditures include installation costs. Costs allocable to a swimming pool or hot tub are not eligible. The property must be installed in a building located in the U.S. and used as a residence; it does not have to be your principal residence.

Useful links

A good place to start your research is at Energy Star's website (Remember: Just because it's Energy Star rated doesn't mean it qualifies for the credit). The following specific link provides a chart of available residential energy credits with more specific links to detailed specifications and how to recognize compliance.

http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#s1

The following website provides a comprehensive list of state, local, and utility energy incentives:

http://www.dsireusa.org/summarytables/financial.cfm?&CurrentPageID=7&EE=1&RE=1

This website provides useful information regarding installation of solar energy panels including a cost calculator that integrates tax credits and local incentives:

http://solar.coolerplanet.com/Content/solar-calculator.aspx1

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