Tax Credits for Consumers

Home Improvements

Tax credits are now available for home improvements:

• must be "placed in service" from January 1, 2009 through December 31, 2010
• must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rentals qualify)
• $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
• must have a Manufacturer Certification Statement to qualify
• for record keeping, save your receipts and the Manufacturer Certification Statement
• improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
• If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.

How does this Credit apply to New Home Construction?

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 (up to $500 per .5 kW of power capacity)

To qualify for the fuel cell credit, the new home you are building must be planned as your principle residence. 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. See the Instructions attached to 2008 IRS Form 5695 to help you further with this provision.

The tax credit for these products is ONLY available for existing homes:

• Windows/Skylights
• Doors
• Insulation
• Roofs (metal and asphalt)
• HVAC
• Water Heaters (non-solar)
• Bio-mass Stoves

For more information check out Federal Tax Credits for Energy Efficiency.