Consumer Energy Tax Incentives
The recently passed Emergency Economic Stabilization Act of 2008 (P.L. 110-343) included, extended and/or amended many consumer tax incentives originally introduced in the Energy Policy Act of 2005 (EPACT). The bill also included tax incentives for businesses, utilities, and government.
About Tax Credits
A tax credit is generally more valuable than an equivalent tax deduction because a tax credit reduces tax dollar-for-dollar, while a deduction only removes a percentage of the tax that is owed. Consumers can itemize purchases on their federal income tax form, which will lower the total amount of tax they owe the government.
Energy-efficient appliances and products provide many benefits such as lower energy bills, increased indoor comfort, and reduced air pollution.
In addition to federal tax incentives, some consumers will also be eligible for utility or state rebates, as well as state tax incentives for energy-efficient homes, vehicles and equipment.
State Credits
The Georgia Clean Energy Property Tax Credit provides credits for:
- Solar Hot Water
- Solar Electricity
- Active Solar Heating
- Wind
- Geothermal Heat Pumps
Equipment must be placed into service between July 1, 2008 and December 31, 2012. Under the legislation, the taxpayer must file an application with the Commissioner of Revenue for approval of the credits which will be issued on a first come first served basis. See the Georgia Environmental Facilities Authority web site for details.
Federal Credits
Residential Renewable Energy Tax Credits
Consumers who install solar electric systems can receive a 30% tax credit for systems placed in service from January 1, 2006 through December 31, 2016; the previous tax credit cap of $2,000 no longer applies. In addition, consumers who install small wind systems can receive a tax credit up to $4,000. Geothermal heat pumps also qualify for tax credits up to $2,000.
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2009 Economic Stimulus Package
How it Affects Housing and Homeowners
If you are in the market for a few home, or are interested in remodeling your current home to be more energy-efficient, you may be eligible for tax credits and incentives that are now in place following President Obama's approval of the American Recovery and Reinvestment Act of 2009, signed into law on Tuesday, February 17.
First-time homebuyers can claim a $8,000 tax credit - a true credit, meaning you never have to pay it back, as long as you meet certain conditions. If you purchased a home after January 1, 2009 or have plans to purchase your first home before December 1, this credit is a great opportunity for you to take the first step toward building personal, long-term wealth. Buyers must remain in their home for at least three years and meet income requirements - you cannot make more than $75,000 as a single buyer or $150,000 as a couple and claim this credit. Visit federalhousingtaxcredit.com for more information on how to claim this credit on your taxes.
In addition to the tax credit, the new legislation has several other provisions that will benefit homebuyers and the housing market. The stimulus:
- Will help homebuyers in high-cost markets by extending the FHA, Fannie Mae and Freddie Mac loan limit of $729,750 through the end of 2009.
- Allows state housing finance agencies to help buyers at closing by advancing the credit as a loan using proceeds from tax-exempt bonds.
- Extends the tax credit for energy-efficient home improvements through the end of 2010, and expands the list of eligible improvements. If you were thinking about adding energy efficient features to your home and "going greener", now is a great time to do so.
- Appropriates $2 billion in HOME funding for affordable housing projects.
- Provides a "patch" for the Alternative Minimum Tax for tax year 2009.
For a complete list of ways the stimulus helps housing, and for more information about how to claim these credits, visit federalhousingtaxcredit.com.
Rebates and Tax Credits for Windows, Doors, and Skylights
On February 17, President Obama signed into law the American Recovery and Reinvestment Tax Act of 2009. This bill extends and modifies the tax credits for windows, doors, and skylights established in the Energy Policy Act of 2005.
The following guidance is not intended as legal advice, and you should consult a tax professional with specific questions:
- To qualify for the tax credit, windows, doors, and skylights placed in service after February 17, 2009 must have a U-factor and Solar Heat Gain Coefficient (SHGC) less than or equal to 0.30.
- Qualifying products purchased between February 17, 2009 and December 31, 2010 are eligible for a tax credit equal to 30 percent of the product cost. The maximum amount of homeowner credit for all improvements combined (including roofing, insulation, HVAC, and water heaters) is $1,500 during 2009 and 2010.
- For products purchased between January 1, 2009 and February 16, 2009, the terms of the tax credit are less clear. The Internal Revenue Service will likely clarify these terms in guidance documents, which are expected to be released later this year.
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