Tax breaks push green residential fixups

Tax breaks push green residential fixups

July 15th, 2009 by Amy Williams in Business

If homeowners work to make their homes greener this year, they could end up with more green in their pockets next year.

Under the American Recovery and Reinvestment Act of 2009, homeowners are eligible to receive a tax credit of up to 30 percent of costs from installing energy-efficient windows or adding insulation.

"Making energy-efficiency improvements to your home can get you a tax credit in addition to lowering your energy bills," said IRS spokesman Dan Boone.

The tax credits are available for individuals for improvements such as energy-efficient heating and air conditioning systems and is just one of several incentives made available through the stimulus package.

The credits became effective in March, with some credits working retroactively and extending for several years.

The residential credit is a maximum of $1,500 for qualifying improvements made in 2009 and 2010, an increase from the old law which had a $500 lifetime limit. The new measures replaced a 2007 law that allowed a 10 percent credit.

Kim Anderson, vice president of Window World Inc. in Chattanooga, has seen an increase in the number of people interested in taking advantage of the energy credits since the law was passed.

Some incentives under the American Recovery and Reinvestment Act of 2009:

* Residential energy efficient property credit

* Plug-in electric drive vehicle credit

* Residential energy property credit

* New clean renewable energy bonds

* Qualified energy conservation bonds

Source: IRS

Staff Photo by Tim Barber Andrew Williams prepares to hang new double-hung windows in a Hixson home for Window World. "These windows, you can clean easily because both upper and lower sections move," Mr. Williams said.

"At least 50 percent of our current customers, if not more, have wanted the stimulus rebate," Mrs. Anderson said. "One of the driving forces behind people wanting replacement windows, beside broken glass, is to have more energy efficiency in their homes."

Windows that qualify for the credit cost between $279 and $350 per window, she said, which is generally higher than a window that doesn't produce energy savings.

The credit known as the residential energy property credit increased the maximum limit available and introduced higher standards for energy efficiency. The residential energy efficient property credit allows a gain up to 30 percent of the cost of residential alternative energy equipment such as solar water heaters, wind turbines and geothermal heat pumps.

In addition to saving money on their taxes by replacing just one window in their home with an energy efficient window, individuals can save 35 percent on their energy bill in a year, Mrs. Anderson said.

People often drop by the Greenspaces Resource Center on Main Street with questions about how to make their houses or business facilities more energy efficient.

Anj McClain, co-director of green building initiative Greenspaces, has noticed a growing number of people with questions about geothermal energy. For many of the people who come in with questions about solar panels or drilling wells for geothermal wells, she usually tells them they are wasting their money if their home isn't already energy efficient.

"We lead them to some fact sheets we have about general energy efficiency, air sealing, insulation upgrades -- that kind of thing," she said.

Along with residential tax credits, incentives also are available for businesses similar to the energy property credit.

The stimulus package added a credit for individuals that buy plug-in electric vehicles. Individuals who buy certain low-speed electric or two- or three-wheeled electric vehicles between Feb. 17, 2009, and Dec. 31, 2012, can get up to a 10 percent, or $2,500, credit.

Tax credits also are available for plug-in electric drive vehicle conversion kits.

Some credits are expanded or extended under the law, such as a temporary increase in credits for properties that offer alternative fuel vehicle refueling. Depending on the type of fuel provided, businesses can get a credit between $50,000 and $200,000.