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Stimulus plan brings tax breaks to homeowners


Times Staff Writer

Most homeowners have a "tomorrow" project or two — you know, the things put off until there's a little extra cash or a lot more time. They mean to get to it; they just haven't yet.

This year might be the time.

As part of the economic stimulus plan, the federal government is offering tax credits for a wide range of energy-efficient products, from windows and doors to solar water heaters.

Figuring out what qualifies, and what makes the most sense for your situation, will take some time, but the homework is worthwhile. The tax credit is equal to 30 percent of the price of products outlined in the plan, with a combined cap of $1,500. (Some higher-priced items, such as solar water heaters, are not subject to the cap.)

"Any project that costs $5,000 or less will get the maximum percentage paid for by the tax credit," says Richard Ham, president of Richard Ham Construction in St. Petersburg. "Improvements like insulation, solar water heaters and (heating and cooling) change-outs, door and window replacements and roofing improvements in homes of the smaller to average size will get the most benefit."

The improvements won't necessarily come cheap — in some cases, the qualifying products are significantly more expensive than alternatives — but you may be able to catch a tax break and replace a woefully out-of-date air-conditioning system at the same time.

"We're estimating that 80 percent of (window and door) products out there will not meet the standards," says Bill Phillips, a director of merchandising and marketing with Home Depot. "You're talking about the cream of the crop with these products."

Manufacturers, he says, are working to reconfigure their products so they meet the standards but are more affordable. The qualifying products are "kind of a moving target, if you will," he says. "Everybody is trying to figure out how to make more affordable products" that qualify.

Some of the larger suppliers are already highlighting their stimulus plan products. Owens Corning Insulating Systems, for example, has step-by-step instructions that illustrate what products to buy and what forms to take to your tax professional at insulation.owenscorning.com.

Save energy, save money

Don't feel as if you need to do everything at once. Some of the higher-priced products have a longer time frame — until 2016 — to get the work done. And, as Sherri Shields of the Florida Solar Energy Center points out, it doesn't help to have a top-of-the-line, energy-efficient heat pump if you have leaky windows. • "The lower energy you can consume, the less equipment you have to buy," she says. • If you're not sure where to start, ask your power company to conduct a free home energy rating, or find an independent contractor that you'll pay. The rating assesses how your home consumes energy and helps pinpoint the most cost-effective changes you could make. • Here are just some of the products included in the plan; you'll find more at energystar.gov. The standards that must be met to qualify for tax credits can be confusing, so be sure to do your research — and talk to a contractor or supplier — to figure out if an upgrade is right for you. • "Energy costs are due to substantially increase in this area in the years ahead, making future energy savings that much more important," Ham says. "Also, all of these things are good for the environment, and as most Floridians live close to the water, keeping the Antarctic ice shelf grounded on dry land is not such a bad thing."

Windows and doors

Exterior windows, skylights and doors must have:

. a U-factor of no more than 0.30

. an SHGC of no more than 0.30

"The up-charge for a standard-sized window from standard impact glass to low-e (low-emittance) insulated Energy Star compliant impact glass is approximately $80 per window, depending on the manufacturer," contractor Richard Ham says. "Of course, smaller houses will have a larger percentage of the cost paid for by the credit, but all houses will benefit from the energy savings. Windows are one of the largest energy wasters, according to the Florida Solar Energy Center."

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Labor and installation are not included.


All Energy Star-labeled metal and asphalt roofs qualify. The roof must be expected to last five years or have a two-year warranty.

"Using Energy Star 3-tab shingles (white only) is a no-brainer here because the cost of the shingle is about the same as the standard shingle," Ham says. "The total job cost for the small- to average-sized house is likely to be less then $5,000, meaning that the tax credit will pay for 30 percent of the total cost. You also get the benefit of energy savings in the form of decreased cooling costs."

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Labor and installation are not included.


As of now, tax credits apply to insulation added to walls, ceilings and floors. The insulation also must meet the 2009 International Energy Conservation Code.

"Insulating your attic is fairly cheap (about 40 cents per square foot for R-30), yields substantial energy savings and the government is going to pick up 30 percent of the entire cost," Ham says. "If you don't have at least R-30 in your attic, just do it."

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Labor and installation are not included.

Heating and cooling systems

Among the upgrades that qualify for the tax credits are high-efficiency central air-conditioning units, including air-source heat pumps, ground-source, or geothermal, heat pumps and high-efficiency water heaters, including heat pump water heaters.

"The approximate cost for a change-out of a 3-ton heat pump unit (to serve an average-size house) is around $3,000 to $3,500 for a 13-SEER unit (the lowest SEER typically available). To upgrade to a 15- or 16-SEER unit to qualify for the tax credit will carry a $1,000 to $1,500 premium," Ham says. "With the $1,500 tax credit, you essentially get the increased efficiency for free."

Central air conditioning

Split systems must have:

. Energy Efficiency Ratio of at least 13

. Seasonal Energy Efficiency Ratio of at least 16

Package systems must have:

. EER of at least 12

. SEER of at least 14

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Installation costs are covered.

Air-source heat pumps

Split systems must have:

. Heating Seasonal Performance Factor of at least 8.5

. EER of at least 12.5

. SEER of at least 15

Package systems must have:

. HSPF of at least 8

. EER of at least 12

. SEER of at least 14

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Installation costs are covered.

Geothermal heat pump

Also called ground-source heat pumps, geothermal heat pumps use the ground instead of outside air to provide heating, air conditioning and, in most cases, hot water. All Energy Star-labeled geothermal heat pumps qualify for the tax credit. They must be placed into service between Jan. 1, 2008, and Dec. 31, 2016.

Tax credit: The tax credit for geothermal heat pumps is 30 percent of the cost and is not subject to the $1,500 cap. Installation costs are covered.

Water heaters

Gas, oil and propane water heaters

. Energy factor of at least 0.82 or a thermal efficiency of at least 90 percent.

. All Energy Star gas tankless models qualify, but not all Energy Star gas-storage and gas-condensing water heaters do.

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Installation costs are covered.

Electric heat pump water heater

. All Energy Star-labeled electric heat pump water heaters qualify.

Tax credit: 30 percent of cost, up to $1,500 for all improvements combined. Installation costs are covered.

Solar water heater

The system must be certified by the Solar Rating and Certification Corp., and at least half of the energy generated by the product must come from the sun. You can claim only the cost of the solar water heating product, not the entire water heating system.

"I think solar hot water units make a lot of sense in this area," Ham says. "The installed system costs from $3,500 to $5,500 but can save from $200 to $300 per year in electricity."

Factor in incentives offered through energy companies and the state, he says, and you're looking at "maybe a seven-year payback, then mostly free hot water for many years."

Tax credit: The credit is is not available for expenses for swimming pools or hot tubs. . . . The tax credit is 30 percent of the cost and is not subject to the $1,500 cap. . . . Deadline is Dec. 31, 2016. Installation costs are covered.

Solar energy: Photovoltaic systems

Photovoltaic systems convert sunlight into electricity that can be used in your home. To qualify for the credit, they must provide electricity for the residence and must meet fire and electrical code requirements.

In the past, the state of Florida also has offered generous incentives for photovoltaic systems. That fund has been exhausted for this year, but it may be renewed in the future. If you do put in a system, you can fill out the paperwork and get on the state's waiting list. If the incentives are again approved, you will be in line to qualify.

Tax credit: The tax credit for photovoltaic systems is 30 percent of the cost and is not subject to the $1,500 cap. . . . The product must be placed in service by Dec. 31, 2016. Installation costs are covered.

Times researcher Will Gorham contributed to this report. B Buckberry Joyce can be reached at (727) 893-8113 or bbuckberry@sptimes.com.

. tips

Before you buy

The tax credits are available only for your principal residence and should be filed on your 2009 taxes (paid by April 15, 2010). Some other tips:

. Double-check before you buy. Not all Energy Star products, for example, qualify for a tax credit.

. Get it done. The item must be "placed in service," that is, ready and available for use, between Jan. 1, 2009, and Dec. 31, 2010, for most products. The deadline is extended for some higher-ticket items.

. Save your receipts and the Manufacturer Certification Statement. For windows, save the Energy Star label. You will not need to submit these papers to the IRS, but you should keep them on file.

. The maximum amount for tax credit is $1,500 for two years (2009 and 2010) for all qualifying home improvements combined. Geothermal heat pumps, solar water heaters, solar panels, fuel cells and windmills are not subject to this cap — and the credits are in effect through 2016.

. If you are building a home, you can qualify for the tax credit for some products, including geothermal heat pumps, photovoltaics and solar water heaters, but not for windows, doors, insulation, roofs, heating and cooling systems or nonsolar water heaters. Check with your builder.

On the Web

The more you can do to educate yourself on the stimulus plan tax credits, the better. Here are some Internet sites worth checking:

. energystar.gov Energy Star is a joint program of the Environmental Protection Agency and the Department of Energy to identify energy-efficient products and services. This site is a good place to begin. Find details about the tax credits by clicking on "Tax Credits for Energy Efficiency."

. energytaxincentives.org The Tax Incentives Assistance Project, sponsored by a coalition of public interest nonprofit groups, government agencies and other organizations in the energy-efficiency field, offers an overview of the tax incentive plan.

. fsec.ucf.edu The Florida Solar Energy Center based at the University of Central Florida has a wealth of information for homeowners. For starters, click on "Consumers" and try out the solar hot water calculator.

. apps1.eere.energy.gov/consumer The Department of Energy Consumer's Guide to energy efficiency and renewable energy is well organized and offers tips for your home, car and workplace.

. dsireusa.org The Database of State Incentives for Renewables and Efficiency lists state and city incentives as well as regulations for renewable fuel sources. Some state incentives that have expired may come up for review under the current legislative session.

. floridaenergy.org The Florida Department of Environmental Protection site lists the state financial incentives for renewable energy.

. fast facts

What are we talking about?

All home products that qualify for the stimulus plan tax credits must meet certain standards for energy efficiency. To the average homeowner, these abbreviations and numbers equal information overload. Some help:

U-factor The rate at which a window, door or skylight loses heat. The lower the U-factor, the more energy-efficient the product.

SHGC The Solar Heat Gain Coefficient refers to the fraction of solar radiation that is admitted through a window, door or skylight and is released as heat inside a home. The lower the SHGC, the less solar heat the product transmits. In other words, a product with a low SHGC rating is more effective at blocking heat gained from the sun during the summer.

HSPF The Heating Seasonal Performance Factor rates both the efficiency of the compressor and the electric-resistance elements. The most efficient heat pumps have an HSPF between 8 and 10.

EER The Energy Efficiency Ratio is a measure of how efficiently a cooling system will operate when the outdoor temperature is at a specific level (95 degrees). The higher the EER, the more efficient the air conditioner.

SEER The Seasonal Energy Efficiency Ratio is most commonly used to measure the efficiency of a central air conditioner. It measures how efficiently a cooling system will operate over an entire season. The higher the SEER, the more efficient the air conditioner.

IECC The International Energy Conservation Code is established by the International Code Council and is the model code used by many, if not most, state and municipal governments for design and construction requirements for energy efficiency.

Sources: Consumer's Guide to Energy Efficiency and Renewable Energy by the Department of Energy, EnergyStar.gov

Don't forget

Watch for updates

Doug Anderson of the Environmental Protection Agency advises consumers to keep a close eye on the news. IRS officials have yet to interpret all aspects of the stimulus plan as it applies to the items listed here, he says. There may be slight adjustments to the qualification parameters upon review.

Stimulus plan brings tax breaks to homeowners 03/13/09 [Last modified: Monday, March 16, 2009 9:18pm]
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