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.

I don’t always believe claims on returns on investment for home improvements. The fluctuating costs for materials and labor—let alone the continual development of better products—makes it all a moving target. But I’m thoroughly convinced that replacing your windows with energy efficient substitutes can make a difference in utility bills and curb appeal.

Recently, I heard about tax credits for installing new energy-efficient windows, skylights, and doors as part of the stimulus plan. With contractors scrambling to make up for fewer customers in the current economy and the $1,500 tax credit for new windows, it could be the perfect time to upgrade your windows. You can read about the credit at the Efficient Windows website.

Do An Energy Audit

The Federal Government has a useful online tool for comparing your year’s-worth of energy bills with similar homes around the country based on zip code, square footage, and family size. You’ll just need a 12-month summary of bills from your utility company (if you haven’t saved a year’s worth of statements) to get started.

Once you have a baseline on how your home is performing, you can make an informed decision on replacement doors and windows. A great way to learn about energy savers for your home improvement projects is through The National Fenestration Rating Council (NFRC). Fenestrations are any openings (windows, skylights, and doors) to the outdoor elements in your home.

When you shop for replacement windows, you’ll find an NFRC label affixed to the product. Ratings measure Condensation Resistance, U-factors, Solar Heat Gain, and Daylighting capacities of each product. In fact, to receive the tax credit for your replacement project, you’ll need to buy doors or windows that comply with NFRC ratings and a signed statement from your supplier.

Understanding NFRC Values

The major performance ratings listed on window, skylights, and doors measure R-value, the product’s resistance to heat flow, and U-value, the product’s heat conduction properties. Manufacturers are evaluated by their compliance with federal energy-savings guidelines for

Air leakage

U-factor

Visible transmittance (VT)

R-values

Sunlight Transmittance

Solar heat gain coefficient (SHGC)

Light-to-solar gain (LSG)

For a complete explanation of the measurements and guidelines, visit the government’s Energy Savers website.

It’s certainly worth an hour of your time to evaluate your current energy use, the kinds of replacement door and window products out there in the market, and whether saving up to a third of your purchase price in tax credits.