American Recovery & Reinvestment Act of 2009/2010

American Recovery & Reinvestment Act of 2009 signed by President Obama made significant changes to homeowner tax credits for certain energy-efficient home improvements to help stimulate the economy & conserve energy.

Homeowners who purchase a qualifying heating & air conditioning system or residential water heater are eligible for a tax credit equal to 30% of the total cost, up to a $1500 maximum for the two years 2009 & 2010.  Geothermal heat pumps also receive a tax credit u pt 30% of the total cost but are not subject to the $1,500 cap.

Homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500) for qualified improvements (Click here to visit Energy Star to see the tax credits) to their primary residence households for 2009 & 2010.

When can tax credits be used?

The new tax credits are retroactive to January 1, 2009 thru December 31, 2010.  The $1,500 limit is fall improvements made during the two-year term, not $1,500 a year.

Expanded Geo-Thermal Credits.

Homeowners who install geothermal heat pump systems may be able to claim up to 30% of the installed costs in tax credits in the year the system are placed into service.  The $2,000 tax credit limit has been removed.  The geothermal tax credit has a longer term, from January 1, 2009 & expires December 31, 2016.

Does the geothermal tax credit apply to new construction?

Yes.  The geothermal tax credit is for new & retrofit construction.

Does a heat pump need to meet each of the minimums to qualify or just one?

Heat pumps must meet each of the minimum standards listed above to qualify for the tax credits.

Does a tank-less water heater apply?

A tank-less water heater with an energy factor (EF) of 0.82 or greater will qualify for the tax credit.

What if the homeowner installs a furnace that meets the 95% AFUE standard but a central air conditioner below the standard?  Can they still claim the full $1,500?

The homeowners can claim 30% of the final installation costs up to $1,500 associated specifically with the 95% AFUE furnace will qualify for the credit.  Should the installation costs associated with furnace not reach $5,000, 30% of the installation cost can still be claimed & the difference between that amount & the $1,500 cap can be applied to any other qualifying improvements.

Can a small business that operates out of a townhouse & installs residential equipment in a commercial setting claim the credit?

No.  The tax credit may only be claimed by taxpayers on their personal income taxes for improvements to their primary residence.

How will a taxpayer claim the credit?

In the past, the IRS has directed taxpayers to use Form 5695, Residential Energy Efficient Property Credit.  Taxpayers are not required to file anything more than the form, but they are instructed to keep records of their installation.  Brown’s will provide our clients with a Manufacturer Certification for their qualified system.  Homeowners should keep the manufacturer certification & receipt for their records.  Individual taxpayer circumstances may vary; consult with your tax advisor for final determination of your tax credit.