Home Insulation and Federal Tax Credits

Posted by Woodrow Aames ~ November 30, 2009

The federal tax credit program for purchasing new insulation materials seems like a win-win proposition to me. For starters, installing insulation that meets the International Energy Conservation Code (IECC) Standards for 2009 means you can enjoy savings on your heating and air conditioning bills. Second, installing new insulation can increase your home value and, third, the tax credit applies to 30 percent of the cost of materials up to $1,500.

In order to claim the tax credit, you have to complete the new installation between January 1, 2009 and December 31, 2010. It applies only to your principal residence. You're required to use the bulk insulation products that meet or exceed the insulation levels required for your geographic location in the United States. You can view the minimum insulation levels for ceiling, walls, floors, and basement walls.

What's Included in the Credit?

Installation costs are not included. According to IRS guidelines, the purchase of bulk insulation materials that meet the R Value requirements-rolls, blow-in fibers, expanding spray, pour-in-place, and rigid boards-are covered, as are weather stripping, air-sealing caulk, house wraps, and spray foam products. Ducts, nuts and bolts, stovepipes, and new roof gutters are not eligible.

The tax credit applies toward materials whether you install them yourself or call in a contractor. The plan was created as part of The American Recovery and Reinvestment Act of 2009. Unlike tax refunds, the tax credit on insulation matches dollar for dollar, rather than a percentage of your tax. The provisions also include your material outlays for energy-efficient windows and doors and replacement heating and cooling equipment.

Harris Heating
Applying for the Insulation Tax Credit

To apply, you need to retain a Manufacturer's Certification Statement that the materials are used for insulation and energy efficiency. The certification document does not need to be returned when you file your taxes, but you may be required to produce your certificate for proof if you're audited. Ask your tax preparer for the pertinent IRS reporting form designated for insulation or window purchases.

Be sure to keep itemized records of your purchase, the receipts for materials, and dates on which the installation was installed.

We have already written about the benefits of completing your own insulation project and the myriad benefits you'd enjoy. If you're uncomfortable with your skills, you'd do well to call in a contractor to do the job, especially if you're considering blown-in insulation.

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