The Deans of Green

Green Tax Credit Guide

comments (5) November 24th, 2009 in Blogs

Ed Pirnik, producer

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With more green tax credit programs available than ever before, now is the perfect time to learn the ins-and-outs of these programs and ally yourself with subs versed in emerging technologies.

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A credit savvy contractor is a bonus for cost-conscious clients.

For too long now, green technology has served as the building industry's proverbial third rail. Contractors set in their ways treat solar power and geothermal energy more like kryptonite than gold, and it's about time the building industry—and those they build for—ask themselves "why?" One of the driving forces behind any respected craftsman is the pursuit of improvement. You'd no more want to build a home that sinks into the ground than you would a structure that needlessly leaks heat like a sieve. Why is it that laminated I-beams were welcomed as a new technology 20 years ago and so-called green technology is seen merely as a political firestorm today? It's time we learned to keep politics out of the tool box and use these new developments to our advantage.

Manic housing starts, an abysmal employment rate and past dodgy lending practices have taken a major chunk out of the industry. In tough times like these, builders and remodelers alike need to get creative with their marketing strategy. A building pro armed with a tool box full of tax saving tips is going to be a heck of a lot more appealing than a traditionalist tied to older, more conventional technologies that cost more over time.

With more green tax credit programs available than ever before, now is the perfect time to learn the ins-and-outs of these programs and ally yourself with subs versed in emerging technologies. When money's tight, a $300K mortgage can look daunting at best, so to transform a potential client into a happy customer, contractors need to be able to present themselves as the go-to folks for money-saving construction methods that preserve dollars up front and in the future.

The current tax credits are lumped into two main categories: those available until december 31, 2010 with a $1,500 aggregate cap (for existing homes only), and those available through 2016 with no cap (existing homes and new construction). What's more, homeowners can generally combine state incentives with those available through the federal government. All of this adds up to some serious savings which can be subtracted from a homeowner's tax burden come April 15th.

How to Claim Your Piece of the Pie

For answers to the most common questions about earning and collecting the credits, take a look at the Top 10 FAQ list at on the Energy Star website.

Other Energy Efficiency Incentive Resources

Residential Energy Efficiency Tax Credit page at the Database of State Incentives for Renewables & Efficiency (DSIRE)

Tax Credits for Energy Upgrades at www.greenbuildingadvisor.com

Heat-Pump Water Heaters at www.finehomebuilding.com

Tax Credits Available Until Dec. 31, 2010 - $1,500 Cap
Biomass Stoves • 30% credit for the purchase and installation of any stove with a thermal efficiency rating of 75% or higher. • The most common stove on the market today is the pellet stove. Although there has been a run on this technology in recent years, leaving manufacturers off guard, the industry seems to be catching up to demand.
HVAC Equipment Purchase and installation of high-efficiency heating an cooling units - including gas- and oil-fired furnaces and boilers, air-source heat pumps, and central air conditioners - qualifies for the 30% tax credit. Here are the requirements for the different types of units: • Natural gas or propane furnace: AFUE ≥ 95% • Oil furnace: AFUE ≥ 90% • Natural gas, propane, or oil boiler: AFUE ≥ 90% • Air-source heat pump (split): HSPF ≥ 8.5; EER ≥12.5; SEER ≥ 15 • Air-source heat pump (package): HSPF ≥ 8.; EER ≥12; SEER ≥ 14 • Central air conditioner (split): SEER ≥ 16; EER ≥ 13 • Central air conditioner (package): SEER ≥ 14; EER ≥ 12
Insulation • 30% credit for the purchase of insulation meeting the 2009 International energy Conservation Code. • Tax credit does not include the cost of installation. • Only products whose primary purpose is to insulate are eligible. Under these guidelines, insulated siding and similar items do not qualify.

Roofing • 30% credit for the purchase of qualifying metal and asphalt roofing materials meeting Energy Star requirements. • Tax credit does not include cost of installation • According to Energy Star, a complete list of all qualifying products does not exist. Contractors and homeowners may either browse through a partial list available on the Energy Star website or obtain the Manufacturer's Certification Statement during the shopping process.
Non-Solar Water Heaters 30% credit can be put towards the purchase and installation of: • Gas, oil, or propane heaters with an Energy Factor ≥ 0.82 (or 90% thermal efficiency) • Electric heat pump water heaters with an Energy Factor ≥ 2.0
Windows and Doors • 30% tax credit is available for the purchase of qualifying windows and doors. • Tax credit does not include cost of installation. • Not all windows and doors meeting Energy Star requirements will qualify for the program. Only products with a U-factor and Solar Heat Gain Coefficient equal to or less than .30 are considered eligible.

Tax Credits Available Through 2016 - No Cap
Solar Energy • 30% credit available for the purchase and installation of solar energy systems including solar water heating and photovoltaic systems. • Minimum of 50% of the energy produced by a solar water heater must come from the sun in order to qualify.

Geothermal Heat Pumps • 30% credit available for purchase and installation of any geothermal heat pump meeting Energy Star requirements.

Wind Energy • 30% credit for the purchase and installation of residential small wind turbines. • Qualifying systems must have a capacity of 100 kilowatts or less.

Residential Fuel Cells • 30% credit available for the purchase and installation of any residential fuel cell system with an efficiency rating of at least 30%. • Tax credit available at 30% of cost, up to $500 per .5 kilowatts of capacity. • Residential fuel cells generate power and heat from the same unit. • Cells run on natural gas and typically produce many times more energy than a solar installation of the same size.

Zero Energy Building Resources

Getting to Zero Energy
Common sense solutions for creating homes that are self-reliant, resilient, and versatile.

Green Building Guide
Our essential guide is loaded with hard-hitting information that covers materials, processes, and design.

Solar Hot Water
Look over the shoulder of an expert installer as he fastens panels to the roof and explains how the system works.

Green from the Ground Up
by David Johnston and Scott Gibson Sustainable, healthy, and energy-efficient home construction $24.95 more info...

posted in: Blogs, insulation, hvac, solar, tax credits, roofing, green energy, geothermal, doors and windows

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Comments (5)

rwotzak writes: Thanks for the feedback. I've updated the article to reflect the more recent additions to the available tax credits, and I've added a few links to other resources for energy-efficiency financial incentives.
Posted: 4:49 pm on June 22nd

Zendog writes: What a disappointing little article- so typical of the content on Fine Homebuilding recently. First off, it has not been updated since November of 2009, so it is seven months out of date on the legislative history. More importantly, it does not cover all of the areas where the tax credit is available- skipping high efficiency furnaces, for one thing. It does almost nothing to tell builders or homeowners what paperwork they need to qualify for the credit. Do you need the plumber to sign off on paperwork for a high efficiency furnace? Does the window installer have to certify that the windows were installed? With no links to state or federal websites to speak of, this is the worst sort of "mailed in" article that I would expect from Better Homes and Gardens or something... Not FH. I could put together more useful content with 20 minutes of internet research.
Posted: 3:02 pm on June 18th

sparksrick writes: This past winter we added a foot of insulation to the attic, and re-insulated some main floor voids between the tops of the foundations and the subfloor that the original contractor ignored. Other than saving the receipts, what do we need to do now to get those tax credits?
Posted: 2:29 pm on June 18th

epirnik writes: To be honest, I feel as though these credits are real no-brainers. For some, the up-front costs may seem prohibitive however, in the long run, consumers can save a heck of a lot of money. And some of this technology - like residential fuel cells, is just plane fascinating! Who knew!?

Posted: 10:23 am on December 1st

DanMorrison writes: Nice summary, Ed.
And I couldn't agree more with your statement "It's time we learned to keep politics out of the tool box and use these new developments to our advantage."

Regardless of who you vote for, dumb building is dumb. I don't know any rich people who got that way by throwing money away.

I'm glad to have some tax credits in place that will encourage folks to do smart stuff, like tighten up their homes and add insulation, but unfortunately, many of the credits don't include the cost of labor. Most od the cost of insulating and roofing is in getting a truckload of guys to the site and up in the attic or on the roof. Cellulose and shingles are cheap.

And there's absolutely no incentive to get a blower door test to see how leaky a house is and where the leaks are. This simple step would go a long way towards tightening up America's housing stock and keeping some of that cash in American's pockets.

For an analysis on these tax credits, see Martin Holladay's column in Musings of An Energy Nerd here: http://www.greenbuildingadvisor.com/blogs/dept/musings/deciphering-tax-credits

For a good pathway to energy efficiency, see the sidebar Seven Steps to Net Zero in Betsy Pettit's article Remodeling for Energy Efficiency in issue 174 of FHB.

Posted: 8:58 pm on November 24th

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