Green tax credits for builders and homeowners - Fine Homebuilding

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The Deans of Green

The Deans of Green


Green tax credits for builders and homeowners

comments (13) December 9th, 2008 in Blogs

Posted by: Rob Moody

Getting tax credits for building a green home or for giving your current home an energy upgrade is like having an extra birthday.

This past October, President Bush signed H.R. 1424, the Emergency Economic Stabilization Act of 2008, after it passed the Senate 74-25 and the House 263-171. The bill includes updates to federal tax credits for energy-efficient homes and those that make use of renewable energy, such as solar power. The credits were originally tied to the Energy Policy Act of 2005, and then subsequently, The Energy Improvement and Extension Act of 2008.

The updated credits kick in on Jan. 1, 2009. Here's a breakdown of the credits you’re eligible for if you build a green home or upgrade your home to the standards listed:

Existing-home tax credits (must be primary residence)

House part

Credit

To qualify

Exterior windows

10% of total cost, up to $200

Must be Energy Star or meet the 2000 International Energy Conservation Code (IECC)

Exterior doors

10% of the product cost, up to $500 (materials only)

Must be Energy Star or meet the 2000 IECC

Storm doors

10% of the product cost, up to $500 (materials only)

 

Insulation

10% of the product cost, up to $500 (materials only)

 

Roofing

10% of the product cost, up to $500 (materials only)

Must be Energy Star

Central AC

$300 toward installation and equipment

 

Heat pump

$300 toward installation and equipment

 

Water heater

$300 toward installation and equipment

 

Biomass space heater or water heater

$300 toward installation and equipment

 

Furnace

$150 toward installation and equipment

Must have an annual fuel-utilization efficiency (AFUE) of 95% or more

Furnace fan

$50 for an efficient air-circulating fan

 

Boiler

$150 toward installation and equipment

Must have an annual fuel-utilization efficiency (AFUE) of 95% or more


New-home tax credits (must completed by Dec. 31, 2009)

Builders can receive a $2000 tax credit for homes that are 50% more efficient in heating and cooling than the 2004 IECC standards.

Renewable-energy tax credits

Energy source

Credit

To qualify

Photovoltaics

30% for equipment and installation; no cap

 

Solar water systems

30% tax credit for equipment and installation; $2000 cap

Must supply at least 50% of the residence’s annual hot water and must be certified by the SRCC (does not apply to swimming pools or hot tubs)

Geothermal

30% tax credit for equipment and installation; $2000 cap

 

Wind

$500 per 0.5kw; $4000 cap

 

Fuel-cell systems

$1500 per 0.5kw

 

Check back for my next entry, where I’ll supply some details about tax credits available in the states where my firm has experience building green homes.

For more information about the tax credits I’ve listed here, check out the Database of State Incentives for Renewables & Efficiency.

 


posted in: Blogs

Comments (13)

billmarket17 billmarket17 writes: These green taxes appear to be reasonable. Many persons want to have eco-friendly houses and this is the first step to make. Also, some people search for great kitchen remodel ideas to reinvent this room and to install in it new appliances that are eco-friendly.
Posted: 5:23 am on November 11th

RDA RDA writes: Read our March 12th entry for more up-to-date information on how the tax credits for energy efficiency and renewable energy may apply to you (http://finehomebuilding.taunton.com/item/5779/what-do-the-tax-credits-for-energy-efficiency-and-renewable-energy-mean-for-you).

And, for the latest updates from the Tax Incentives Assistance Program check out: http://www.energytaxincentives.org/.
Posted: 4:41 pm on March 24th

sixtoes47 sixtoes47 writes: Sixtoes47 You mean, that even if I am the GC, building my own new home, I won't qualify for the tax credits.

But if I purchase an older house and renovate the house, that I as an individual can use all the tax credits that I could qualify for. (Ref: Wtaergodess)

Then can Schmitty201 tell me how he worded his application for tax credits wrong....

I also aggree hiles8500, I live in Maryland also and the amount of credit or grants that they offer next to nothing. I think that cities like Austin are setting some good examples.

But, I as the person who wants to build a house with ICFs and SIPs, combined with PV and SHW for radiant floor heating.
should get grants and tax credits since I am the one who will be paying for the house over the next thirty years. Not to mention that there also should be extra credits or grants if you are a veteran. After all the Vet's risked their lives so that we here at home can enjoy the safe freedoms that we so dearly enjoy. Thanks. Can some one anwser some of my questions?
Posted: 12:30 am on January 13th

MarkWD MarkWD writes: In regards to Panthergirl: Passive House standards are a viable consideraton in new,retrofit residential and commercialbuilding construction. www.passivehouse.us, With this new administration there has been introduced by Edward Mazria works for mortage credits for retrofit construction with Architecture 2030 stimulus plan. It seems to me these passive house (PH) standards fit right in Obama's 2050 plan too for 80% energy reductions. PH gives 90% reduction in Heating and cooling costs compared to conventional construction. EU is considering implimenting it. Other ref: google biohaus in Bemidji Minnesota, and Skyline house in Duluth, MN. I hope to build a PH,in 2-3 years, in southeast South Dakota. I am planning to spend 15% up front but my life time cost for energy consumed will pay it back, plus there is better Indoor Air Quality with it.
Posted: 8:13 am on January 5th

greenway greenway writes: TerraLogos, can you provide access info to the IRS documentation for eligibility of "Blower door guided whole house air sealing" for a tax credit? Thanks...
Posted: 9:10 pm on December 27th

schmitty201 schmitty201 writes: watergoddess
then think outside of the box and restructure your project to comply with the tax code.
The art is in how things are described.
I tried to do a project but I described it wrong and was turned down. Later I was advised had I changed just a few words it would have qualified.

Posted: 4:17 pm on December 19th

watergoddess watergoddess writes: the tax credits while great for someone remodeling, they are worthless if you are building your own home. My husband and I are building our own house and acting as GC. Even though the home is being built using lots of energy efficient materials, windows, insulation, metal roof, very efficient AC/heatpump, the list goes on. WE are not eligible. The house is new construction and energy credits are only available to BUILDERS. I contacted the IRS and was surprised to learn this. So we will have to be content with the rebates our energy company offers.
Posted: 9:54 pm on December 17th

UltraEnergyEfficient UltraEnergyEfficient writes: The great confusion is using the terminology "GREEN". Nothing wrong with the objectives of effectively improving energy efficiency, comfort and IAQ. The problem is the confusion in the minds of homeowners of what "green" means to them.
Posted: 1:51 pm on December 17th

TerraLogos TerraLogos writes: "Blower door guided whole house air sealing" and duct system sealing using AreoSeal qualifies for tax credit when the contractor reports in writing the test-in and test-out CFM's --- which yields the % reduction in leakage. Like adding R value, measured leak reduction counts for tax credits. This was interpreted for us by IRS.
Posted: 4:53 pm on December 16th

panthergirl panthergirl writes: On the subject of energy audits, I live in ND, one of the coldest states in the nation. No energy audits available, except the same old DIY info: "Add insulation and weather stripping (wow. We've never heard of THAT before!), buy an energy efficient furnace from us, buy a new water heater and refrigerator. Turn off lights and buy CFLs, blah blah blah". Our utiities practically laugh in your face or plead poverty or use some other excuse when you ask them about doing an energy audit. I guess they are just fine with our energy costs putting plenty of cash in their pockets. This is inexcusable. Not everything can be diagnosed by the average homeowner. We have several mysteriously cold areas in our house that I have been unable to remedy. Finally, the extension service has said they will be making some equipment available which I will be using as soon as possible. It was 28 below yesterday morning, "only" 20 below this morning. Oh, and I don't mind giving names of area utility companies: Montana Dakota Utilities (aka MDU), OtterTail Power, & rural electric cooperatives associated as Touchstone Energy.
Posted: 11:06 am on December 16th

Jim77 Jim77 writes: I own a 40 unit apartment building that could really use some "greening". Any tax credit hopes?
Posted: 9:40 am on December 16th

ajssolutions ajssolutions writes: More incentives need to be given for home energy audits. I had a company in Chicago, Building Energy Experts do an audit on my home. After about $500.00 in materials I reduced my energy bills by 40%. Why don't they recognize that energy efficiency is the real key to reducing carbon emissions and breaking the habit of foreign oil? If they really wanted to make a difference they would take a serious stand on this issue and start requiring that audits are done each time a house is sold. The EU does this and I think Nevada requires it also. That's were the push and Tax incentives need to be.
Posted: 8:31 am on December 16th

hiles8500 hiles8500 writes: Thanks for promoting these credits. Unfortunately, they don't do enough to push the envelope. I gutted an old house in 2008 and put in icynene foam, better systems, energy star white roof, etc. 2008 happens to be the gap year in which these credits did not apply. My state, Maryland, has anemic state credits.

But the real problem is with the linked cap that is applied to the rehab credits. If you do one thing, then you get the credit. If you do more than one thing, once you qualify for $500 in credits then you are done. People need more of a push to get things like icynene competitive with fiberglass. Updatng our existing housing stock is much more energy-efficient than building new efficient housing. Rehabbers should be eligible for at least the $2000 that new home builders can get. I guess NAHB isn't looking out for the remodelling industry...

I'd like to see Taunton Press sponsor a Practical Green Building event at the National Building Museum in Washington DC. It should feature Amory Lovins of the Rocky Mountain Institute. It should happen in February or March.
Posted: 12:07 am on December 16th

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