Sunday, January 10, 2010

Green Tax Incentives for the Home (Part I)

There are federal tax credits to help you green your home. IRC Sec. 25C and IRC Sec. 25D provide for the federal credits. I'll cover IRC Sec. 25C in this post and IRC Sec. 25D in the next post.

IRC Sec. 25C provides Non-business Homeowners Energy Credits of 30 percent up to $1,500 aggregate cap. This credit is for expenditures made in 2009 and 2010. It is set to expire at the end of this year. IRC Sec. 25C is for improvements to a principle residence.

The credit is for:
  • Qualified energy efficiency improvements, and
  • Residential energy property expenditures
"Qualified energy efficiency improvements" is mostly about improvements to the building envelope. Windows, skylights, roofs, insulation, and doors would all qualify if they meet the appropriate performance standards.

"Residential energy property expenditures" is where you get your credit for furnaces, boilers, heat pumps, air conditioners, hot water heaters, fans, and the like. This equipment must meet performance and quality standards to qualify.

The IRS issued Notice 2009-53 to provide interim guidance on the credit. One thing to note is that the IRS cautioned that Energy Star certification doesn't establish that a product is qualified for credit, especially with regards to exterior windows and skylights placed in service after enactment of the American Recovery and Reinvestment Act of 2009.

Taxpayers should make sure they receive proper certification from the manufacturer for property on which they plan to take the credit.

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