It's time to revisit the American Recovery and Reinvestment Act of 2009 and its energy improvements section. In sum, Section 1121 of the act was created to offer a $1,500 tax credit for materials applied towards an energy retrofit of windows, skylights, doors, insulation and roofing.
Homeowners can earn the credit up to a 30 percent ceiling on materials. However, if you're working with heating and air conditioning, you could receive a credit up to 30 percent of the cost and installation for a solar- powered water heater or biomass stove. Another provision of the legislation creates a no-repay $8,000 tax credit to a first-time homeowner.
Tax Rules and a Quick Warning The provisions of the stimulus tripled the size of credits for upgrading your home. But you must meet Federal requirements to successfully file for the credit or return. All new HVAC systems or new windows, skylights, doors, etc., have to be installed between January 1, 2009, and December 31, 2010.
If you're planning on taking the credit, you must buy products that meet Federal energy efficiency requirements. Even a product identified on its label as an Energy Star certified item may not meet the regulations. New compliance levels have been set based on National Fenestration Council (NFRC) ratings for U-Factor and Solar Heat-Gain-Coefficient values.
There are varieties of insulation products that meet lifespan and warranty requirements that you can add to your materials checklist. And roofing materials that meet Energy Star requirements may also qualify.
Insist on Paper For each purchase you want to apply to your tax return, you'll need the receipt, the product tag verifying its energy-efficiency ratings (Manufacturer's Certification Statement), and a separate form provided by the retailer indicating the sale of an qualifying item.
Don't confuse your contractor with your tax attorney. Look carefully at advertising from contractors who claim that they'll match your $1,500 tax credit. That's assuming that you can qualify for one. Remember, only certain energy-efficient renovations qualify for tax credits and include labor costs. Review the list at the Energy Star website.
Also, don't take a contractor's word that the materials meet the provisions unless you see the actual manufacturer's certification tag. Any contract or work-order you arrange with your installer should itemize materials costs in a separate breakout from labor. You'll need to save all the documentation you can for your records.
It's worth a note that the law also set aside $5 billion in funds for weatherization assistance to qualified low-income households.