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The Economic Impetus Bill of 2009 provides tax credits to homeowners who install qualified, energy saving home improvements during 2009 and 2010. Credits are limited to a maximum of 30% (up to $1,500) of Installed Costs. The following is for information only. You should check with your tax advisor.
Longer Term
The new tax credits are retroactive to January 1, 2009 and expire on December 31, 2010. The $1,500 limit is for all improvements made during the 2-year term, not $1,500 per year.
Per-Appliance Caps Have Been Removed
Unlike the 2006 and 2008 Tax Bills, homeowners may use the entire $1,500 tax credit on a single qualifying improvement. The previous per-appliance caps that limited the homeowner to just $150 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump have been removed.
Lifetime Limit Removed
Homeowners that previously claimed tax credit in 2006 or 2007 are eligible for the full $1,500 limit in the new bill.
Qualifying Improvements
Air Source Heat Pumps—Minimum efficiency ratings apply at 15-SEER 12.5EER and 8.5 HSPF
Central Air Conditioner—Minimum efficiency ratings apply at 16-SEER and 13-EER.
Natural Gas Furnace—95% AFUE
Air Sealing your home to reduce infiltration
Windows and Doors
Insulation (but not Radiant Barrier)
Geo-Thermal Heat Pumps qualify with special provisions and expiration dates in 2016.
TexasAirDoctors.com • 817-329-0334 • TACLA20089E
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Frequently Asked Questions |
Q: Can the homeowner claim $1500 in tax credits for improvements made in 2009 and again for improvements made in 2010?
A: No. Taxpayers may only be eligible for a total of $1500 in tax credits for improvements in the combined two year period of 2009 and 2010.
Q: What happens if the 30% of the installed cost is less than $1500?
A: The homeowner can ”bank” the remaining available tax credit for other qualified improvements. Any single installation that costs more than $5000 will instantly reach the $1500 limit.
Q: Does the Tax Credit apply to the cost of the material or to the labor plus material?
A: The tax credit applies to the installed costs of the qualified equipment, which includes labor.
Q: How will a taxpayer claim the credit and receive their money?
A: By using Form #5695, Version 2009 (expected to be available toward the end of 2009) Residential Energy Efficient Property Credit. Taxpayers are not required to file anything more than the form, but are instructed to keep records of their installation.
Q: What’s the difference between a tax credit a tax deduction?
A: As a tax credit applies against the taxpayer’s liability, a tax deduction applies against a taxpayer’s income, lowering the adjusted gross income and possibly moving the taxpayer to a lower bracket. Tax credits have a greater benefit to a taxpayer. With a tax credit, if the taxpayer owes $1,500 in taxes, their liability is reduced to $0.00. If they owe nothing, they can expect a $1500 refund.
Q: What if the homeowner already claimed $500 in tax credits in 2006 or 2007?
A: The “lifetime caps” that used to be in place have been removed. Any previous claims do not count against the current $1500 tax credit limit.
Q: Can a homeowner claim the credit for improvements to a second home?
A:No. The tax credit is only available for improvement to the taxpayer’s primary residence.
Q: What other types of energy efficiency improvements qualify for the tax credits?
A: Homeowners may be able to qualify for the tax credits if they make qualified improvements to: air infiltration, windows and doors, air conditioners, heat pumps, furnaces, insulation, and others. All of these improvements qualify, but homeowner may only claim $1500 in total for any improvements.
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