Going green can lower the tax bill

Though not necessarily news, I received the following info from one of my lender contacts and thought I’d pass it along…

New federal tax credits are now available for green home improvements on a principal residence. Qualifying modifications must meet a certain energy efficiency level to be eligible for the credit.

The credits are available for improvements purchased and in service from January 1, 2009, through December 31, 2010. The amount of the credit is deducted from any income taxes the homeowner may owe. The credit is nonrefundable, allowing taxpayers to lower their tax liability to zero, but not below zero.

Tax credits are available at 30% of the cost, up to $1,500, in 2009 through December 31, 2010 (for existing homes only) for:

  • Windows and Doors
  • Insulation
  • Roofs (Metal and Asphalt)
  • Heating, Ventilating, and Air Conditioning (HVAC)
  • Water Heaters (non-solar)
  • Biomass Stoves

Tax credits are available at 30% of the cost, with no upper limit through December 31, 2016 (for existing homes and new construction) for:

  • Geothermal Heat Pumps
  • Solar Panels
  • Solar Water Heaters
  • Small Wind Energy Systems
  • Fuel Cells

Make sure products purchase come with a Manufacturer Certification Statement — a statement from the manufacturer that indicates the product qualifies for the tax credit. For record keeping, experts advise that homeowners retain all receipts.

Additional details can be found at www.energystar.gov/taxcredits and www.homedepot.com/taxcredit


  1. willk

    Thank God for that money tree they have over in DC!

  2. smarten

    BTW, this is the legislation affectionately called the “cash for caulkers” program. We’ve actually had various versions of this legislation for decades; especially the tax credits for purchasing alternative forms of energy.

    One of the problems with producing alternative [like solar] energy has been that although local utilities are required to pay the homeowner for the excess that goes back into the grid, it’s at the lowest rate; and, it’s limited to the energy the homeowner purchases from the utility [thus it’s nothing more than a credit]. That all changed in CA. last year in that utilities are now required to purchase ALL the excess energy produced by an homeowner. Don’t know about NV. but I think similar legislation would be a plus.

    Besides the fact that incentivising the country to reduce its appetite for foreign oil consumption is a good thing [at least IMO], I find turning the local homeowner into a farmer/seller of energy to be an equal good thing.

    IMO using government money that pays for itself in the long run is a good thing.

  3. MikeZ

    RE: “Thank God for that money tree they have over in DC!”

    Come on, Will, that’s just a knee-jerk cliche.

    Do you oppose this tax credit? If so, explain why?

    It looks to me like a well-targeted tax credit.

  4. Tom

    Solar energy and wind power are actually very inefficient producers of electricity, and the payback via purchased power will not recover the acquisition costs for several years. This green energy is a positive step, but it is not the panacea that some politicians suggest it to be. We need a full plate of programs, including building safe nuclear energy plants and the opening of what are presently `off-limits’ areas for domestic drilling, to move us toward energy independence. I am hoping that during the course of this year, courageous candidates will step up and make the case for these things.

  5. skeptical

    Producing power at the point of demand results in dramatically increased efficiency. Losses from transmission can eat up to half the power produced. Instead of having power plants in the middle of the desert, and then transferring it via our obsolete power infrastructure, the power is produced at the point of consumption.

    Tom is correct, in that it takes several years to pay off a solar array on one’s roof. Tax credits like this one may be enough to push the economics just enough to make it pay off for the homeowner.

    I was against cash for clunkers and the first time homebuyers tax credit. They just pushed demand to the left (or artificially increased low end home prices). This incentive, on the other hand, is good for homeowners, good for small business, and good for the country.

  6. smarten

    Skeptical, there’s an outfit in the Bay Area that is advertising rental of a solar system that results in lower utility bills. They ask for $500 up front and in consideration, they’ll install and maintain a solar system on your roof. Then they charge you for the energy the system produces/you use, however, at a lower rate than PG&E. So yes the cost to purchase may take years to recover, but possibly not when a solar system is leased.

    Although I haven’t read the legislation, I wonder if the company in question is able to claim the tax credit on the homeowners’ behalf?

    But the landscape is changing.

  7. BanteringBear

    A big problem with solar is in the storage of the energy harvested. People need power at night, and on days with no sun. That’s when battery banks come into play, and the already high costs of the systems are increased greatly. Worse, used up batteries are toxic waste. For this very reason, I don’t see solar as a very clean energy, unless and until great progress is made in this area. It’s hard to consider solar or electric cars “green” with all the toxic waste bi-products of such systems.

  8. smarten

    So did we see 60 Minutes this evening?

    Bloom Energy – a little fuel cell wafter made from sand with secret sauce coatings on either side that produces energy from oxygen which is transmitted wirelessly. You can read about it at http://www.cbsnews.com/stories/2010/02/18/60minutes/main6221135.shtml .

    The idea is for every home to have a little bloom box in its back yard at a cost of under $3K. Pretty amazing and apparently it’s for real as eBay, Google and Wal Mart are all rave users.

  9. Sully

    smarten, read up a little bit more on this.

    Air and a fuel (currently natural gas) is converted by fuel cells to produce electricity, by product is hydrogen.

    Wireless transmission (think cell phone) for signals is a whole different ball game then electrical power transmission.

    The perpetual motion machine has not been invented yet and more likely than not – never will.

    This is not to distract from the potential advantage of fuel cell use in the future, the current costs are prohibitive for small users.

  10. Old Parnell

    I to saw the 60 min’s show. Sketpical but still impressed.
    I’ve noticed that simple conservation does not often come up as much as it should, We are always looking to add more power or use more gadgets.
    A conversation I had with one of my tenants went like this:
    Tenant: “My brand new hot water heater isn’t working”.
    Me: Oh no, Is the problem throughout the day, or just in the morning?
    Tenant: “Well, when my husband is finished with his morning shower, there isn’t enough hot water”
    Me: How long on average does his shower take?
    Tenant: “Around 20 minutes, sometimes longer”
    Me: You might want to consider a shorter shower- 4 gals/ min times 20 minutes will pretty much drain the tank.
    Tenant: “Can’t we just get a new bigger hot water heater”?
    Me: Speechless.
    Yea, conservation not quite there yet.

    Old Parnell – 4 minute shower guy.

  11. Tom

    Parnell, I had a tenant stuffing corn husks into the garbage disposal, and when it jammed up, she called and wanted me to buy a stronger disposal.

    That’s when we decided to sell the apartment building.

  12. CommercialLender

    Old Parnell,

    Funny story. You may be aware, but many larger landlords of several hundred or several thousand units portfolio-wide will institute a RUBs system, or utility cost sharing on pro rate basis to the tenants. So, their monthly bill will be X for rent and Y for their share of common utilities. This puts conservation right back on the tenants who otherwise would not give a flip about your water bill or the gas bill to heat the water, assuming your numbskull tenants had landlord-paid W&G. Now add sewer bills, trash bills, etc. up until the point where tenants move for cheaper digs, but over time as more of these systems become the norm, more tenants will conserve.

    In an ironic twist, this simple plan increases the costs for the ‘typically’ lower-end socio-economic strata person who rents in larger apartment communities, forcing them to be more responsible. Funny, the government wants to mandate such conservation behaviour but seems always to stop short of such a mandate, perhaps for this socially tax/regressive result.

  13. smarten

    Since a number of you are Los Angeles people, may I ask for some help?

    As some may know, I invest in deeds of trust. I have one going to sale this morning and the property is located in Compton [I know, ugh]. It’s a first secured by a SFR that at least at the time of origination, represented a very low LTV ratio [who knows, so low that maybe I’ll get lucky and some Page Ventures wannabe will buy the property at sale].

    But if not and in any event I’m expecting the worst and am out-of-the area. So I’m looking for a referral to a local agent who may specialize in reselling properties such as these who has access to workpersons who can get in/out and do the refurbishment necessary to resell. Do any of you have any referrals?

    If so and you don’t want to share them over the internet, both Mike and Guy know my e-mail address if you want to send a message. Thanks in advance for the help.

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