Home Energy Credits Still Available for 2011

IRS Tax Tips:

There is still time this year to make energy-saving and green-energy home improvements and qualify for either of two home energy credits.

The Nonbusiness Energy Property Credit is aimed at homeowners installing energy efficient improvements such as insulation, new windows and furnaces. The credit is more limited than in the past years, but can still provide substantial tax savings. • The 2011 credit rate is 10 percent of the cost of qualified energy efficiency improvements. Energy efficiency improvements include adding insulation, energy-efficient exterior windows and doors and certain roofs. The cost of installing these items does not count. • The credit can also be claimed for the cost of residential energy property, including labor costs for installation. Residential energy property includes certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass fuel. • The credit has a lifetime limit of $500, of which only $200 may be used for windows. If the total of nonbusiness energy property credits taken in prior years since 2005 is more than $500, the credit may not be claimed in 2011. • Qualifying improvements must be placed into service to the taxpayer’s principal residence located in the United States before January 1, 2012. Homeowners going green should also check out the Residential Energy Efficient Property Credit, designed to spur investment in alternative energy equipment. • The credit equals 30 percent of what a homeowner spends on qualifying property such as solar electric systems, solar hot water heaters, geothermal heat pumps, wind turbines, and fuel cell property. • No cap exists on the amount of credit available except for fuel cell property. • Generally, labor costs are included when figuring this credit. Not all energy-efficient improvements qualify for these tax credits, so homeowners should check the manufacturer’s tax credit certification statement before they purchase. Taxpayers can normally rely on this certification statement which can usually be found on the manufacturer’s website or with the product packaging. Eligible homeowners can claim both of these credits on Form 5695, Residential Energy Credits. Read more at www.irs.gov.

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Home Builders Applaud Congress on Extending Home Buyer Tax Credit

November 5, 2009 - The National Association of Home Builders (NAHB) today applauded Congress for passing legislation that will extend and expand the $8,000 first-time home buyer tax credit, stating that this will provide a much-needed boost to the fragile housing market and economy.

“We commend lawmakers for acting in a bipartisan manner to extend the first-time home buyer tax credit beyond its Nov. 30 deadline and expand it to a wider group of home buyers,” said NAHB Chairman Joe Robson, a home builder from Tulsa, Okla. “The tax credit has proven to be a powerful economic incentive. Today’s action by Congress will further stabilize housing and the economy by creating new jobs, stimulating home sales, reducing foreclosures, cutting excess inventories and stabilizing home prices.”

The new law will extend the $8,000 credit for first-time home buyers for sales contracts entered into by April 30, 2010 and closed by June 30. Further, it has been expanded to include a new $6,500 credit for owners of existing homes who are purchasing a new home as a principal residence. An existing home owner can claim the $6,500 tax credit if they have been residing in their principal residence for five consecutive years out of the last eight. Additionally, the income eligibility limits to claim the full credit amount for both groups of home buyers have been raised to $125,000 for individuals and $225,000 for married couples.

NAHB estimates that the extended and expanded home buyer tax credit will create 211,000 jobs and generate 180,000 additional home sales in the coming year. It is also expected to generate $9.6 billion in wage income and $6.9 billion in federal, state and local taxes.

The legislation, which also extends unemployment insurance benefits and offers relief to cash-strapped firms by providing broader tax benefits for businesses with net operating losses (NOLs), is expected to be signed into law shortly by President Obama.

“The new NOL rules will throw a lifeline to struggling businesses, allowing them to continue making payrolls, paying business loans and otherwise keep their doors open until the economic recovery takes hold,” said Robson.

Source: http://www.nahb.org

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Solar Energy: What Does it Cost?

How much does solar energy cost? Our friends over at the Clear Mountain Solar Store are glad to help with the answer:

Although we cannot emphasize enough that it all depends on many factors: your lifestyle, your individual needs, your site (how much sun you receive, roof space, shading), whether you will be on-grid, off grid, on-grid w/battery backup, using a pole mounted tracking system, etc. However, there are some broad guidelines that we detail below to give you some idea of the gross “installed” cost.

Remember, your net cost will likely be 50-80% lower after deducting federal, state, and local incentives. For solar hot water we have only detailed equipment cost because installation expense can vary significantly, especially if the system is a retrofit on an existing home. And don’t forget, solar energy systems installed in Vermont are EXEMPT FROM RETAIL SALES TAX! As of October 2008, 77 cities and towns in New Hampshire have adopted a property tax exemption for one or more
renewable energy sources.

Photovoltaic (Solar Electric)
Grid-tie
$8-10/watt typical installed
cost - residential
$6-8/watt typical installed cost - commercial

Grid-tie with battery
backup
$12-13/watt typical installed cost

Off-grid
$15/watt typical
installed cost

Solar Thermal (Domestic Hot Water & Space
Heating)*
Solar Hot Water for a family of 2 - $2,848
Solar Hot Water for a family of 4 - $4,649
Space Heating for 1,000 sq. ft. - $12,500
Space Heating for 2,000 sq. ft. - $16,500
Pool Heating - $1,200-$3,500

*Approximate costs not including installation, but before federal tax credits and state incentives. Installation expense typically adds $4,000-6,000 to the figures above.

Energy-conscious families can reduce their emissions by up to two-thirds by using renewable energy systems. (And if you are building a new home, you have a great opportunity to incorporate energy efficient systems and materials to reduce your carbon footprint.)

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Tax Credits for New Green Homes

Tax credits for new green homes are better than ever! A 30% tax credit (including labor and installation), with no upper limit, is available for consumers building new homes (through 2016) for:

• Photovoltaics
• Solar Water Heaters
• Geothermal Heat Pumps
• Small Wind Energy Systems
• Fuel Cells (for primary residences only)

The credit for photovoltaic, solar water heaters, geothermal heat pumps, and small wind energy systems does not have to be for your principal residence; so, rental units, second homes, etc... are all eligible.

For more information, see

2008 IRS Form 5695 to help you further with this provision.

There is a $2,000 tax credit for building a new energy efficient home, but it is ONLY available to "eligible contractors"; therefore, owner/builders may not receive the builder tax credit unless employed as eligible contractors.

See Energy Star and the IRS for more information.

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