Many of us have heard about the Home Star Energy Retrofit Act of 2010 (or "Cash for Caulkers") program that was passed by the House of Representatives last month and is currently waiting to clear the Senate. It sounds as if this bill could be a win/win situation for homeowners and contractors--homeowners will get excellent rebates on "green" products which, in turn, should kick-start the construction industry and create jobs.
However, the bill itself is VERY comprehensive. There are 13 types of retrofit projects eligible for rebates, and each product has unique eligibility requirements and set rebate amounts--so it can be quite confusing for consumers. I recently read an excellent blog article that does a nice job of breaking down the eligible projects by type and giving a concise description of the requirements and rebates available for each. (http://tinyurl.com/2f3bhs8) Whether you’re a consumer or a contractor, this easy-to-understand chart will make it easier to clearly see what types of rebates the Home Star bill will provide.
And although I believe Home Star will be great--both for homeowners who want to make their homes "greener" and save money on energy costs, and for contractor still feeling the effects of the economic downturn--it’s important to remember that this bill could take weeks, or even months, to become a law. For homeowners who want to replace their windows or doors, add insulation, or make other energy-efficient improvements to their homes RIGHT NOW, there are still excellent federal tax credits available for 30% of the cost of qualified products--up to $1,500. For more information on the existing tax credits, visit http://www.energystar.gov/index.cfm?c=tax_credits.tx_index.
As Congress debates the details of the Home Star bill many people have asked the question of which federal program is better for them – Home Star or the Tax Credit program. Many consumers have delayed their buying decision until they learn whether Home Star will ever be passed and if so, what the final language will mean to them. As with most decisions like this, there isn’t a clear-cut answer. It really depends on your situation.
The American Recovery & Reinvestment Act of 2009 (ARRA) created a tax credit for homeowners who replaced their old windows with new energy efficient replacement windows. The tax credit allowed the homeowner to receive a credit of 30% of the window cost (excluding installation), with a maximum of $1,500. The money would come in the form of a tax credit on your tax returns. As with most tax credits, it reduces your tax liability. If you have no taxable income or tax liability that can be reduced, you wouldn’t receive a benefit. For the average working class person, this tax credit is a significant incentive and would increase their tax rebate or reduce their tax payment in April.
The Home Star Energy Retrofit Act of 2010 is a bill that is being debated in Congress now. It isn’t clear whether this will ever become a law or not. So, there is a risk is waiting to see if it gets passed because the tax credit program expires on 12/31/10. You don’t want to miss out on both of these programs. The draft language of Home Star proposes upfront refunds on energy efficiency upgrades to your home. This could include windows, insulation, water heaters, HVAC, etc. Replacing windows would potentially offer a rebate of $1,000 if 8+ windows were replaced (or 75% of the windows in the home). This $1,000 would be taken off of the contract price from the home improvement company who sells you the windows. They would then apply for a refund from the government. This is similar to the Cash for Clunkers program that car dealerships offered.
The program that is best for you depends on your individual situation. The pros for the tax credit are that it exists today and the rebate amount for windows is higher. Home Star, if passed, would provide a lesser amount for windows, but it would be upfront money. Home Star would also have the benefit of allowing you to do multiple efficiency upgrades at one time to allow for an even higher rebate. e.g. – You could replace your windows, add insulation to your attic and add a solar hot water heater. This might result in several thousand dollars in discounts, but you’d have a much higher investment cost to get those returns.
Regardless of which program you feel best suits your needs; you don’t want to pass up these opportunities because they won’t be around for long.
There has been lots of talk about the energy tax credits available for improving the energy efficiency of our homes. Now Congress has another program that they have been debating named the HOMESTAR program.
This proposed program as it is written currently has tax credit ranging from $3000 to $8000 depending on how much you spend on your energy efficient projects. It also is based on the total scope of your overall projects.
The current tax credit in place today allows homeowners to deduct 30% (up to $1500) off the materials of an approved Energy Star home improvement upgrade. This program is scheduled to expire at the end of 2010.
So as homeowners, should we wait to see if the HOMESTAR program passes, take advantage of the current tax credit program, or just do nothing? If we as homeowners choose to do nothing, we are already paying for bad windows, insulation etc. We just accept the fact that our energy bills are what they are, and seem to increase every year. We just pay the bill, no matter how painful it is.
But if we improve our homes with energy efficient windows or reflective insulation for example, we not only invest in our homes, but we also save money on our heating and cooling bills. On top of this, we make our homes more comfortable to be in during the year. Going this route, not only do we get the benefit of lower energy bills and comfort, but we also add to the value of our homes. Google the Cost vs. Value report to see what I mean.
My viewpoint is obvious, I believe it is better to do something than keep the status quo. I compare it to making a difficult decision, the worst thing you can do is nothing. This being said, what should we do as homeowners when it comes to taking advantage of these tax credit programs?
Right now, the decision is easy. There is only one program in place and this is the energy tax credit of up to $1500. There is no guarantee the HOMESTAR program will pass, so it is better to take advantage of the program already in place before it expires.
With the HOMESTAR program, even if it does pass, it is my OPINION, that we will be able to somehow take advantage of both programs. But no one will really know for sure until the bill actually passes, if in fact, it does.
If you’re still considering replacing your windows in 2009, you may be finding that window dealers or home improvement companies are not as available as before to meet with you to discuss windows. This is actually not unusual, because traditionally November is a time when homeowners rush to replace their windows before the colder weather arrives -- and window dealers have more work than they can handle.
Compounding this situation this year are a few additional factors. One is pent-up demand and the improving economy. Many who waited because of lack of confidence in the country’s financial stability now feel they can make purchases with confidence. Another factor is unquestionably the $1,500 federal Tax Credit program and the rush to purchase qualifying windows before year’s end.
A thing or two about the Tax Credit: One is that windows must be installed in 2009 to be eligible for the credit to be taken on your 2009 return. It’s still possible, of course, but it will be close if you’re ordering windows now. The other thing to remember is that you do have until December, 2010, to take advantage of the program.
The good news? If you do purchase windows now and they are installed in early 2010, you still win financially because you’ll save money with lower winter heating bills – and you still get the tax credit (although later).
So many manufacturers and companies are promoting the amazing $1,500 tax credit that homeowners can get as part of the 2009 American Recovery & Reinvestment Act. This is a very good thing for the home improvement industry because it stimulates business. It’s good for the country because it stimulates business, helps make the environment cleaner and lessens America’s dependence on foreign oil.And of course it’s great for homeowners because it puts cash into homeowners’ handsand saves them money by virtue of lower heating and cooling costs.
Some companies are so excited to push this tax credit program that they fail to fully explain all the details. Gorell has always understood the importance of doing business with integrity and works with home improvement specialists that carry Gorell windows to take the time to ensure homeowners understand the requirements of the program—and talk to their tax advisors about the tax credit. While this is a great program for consumers, there are specific requirements pertaining to products purchased for the tax credit and there are also government tax regulations pertaining to the tax credit program. For example, the tax credit applies only to the homeowner’s primary residence. Also, a homeowner’s tax credit cannot exceed his or her tax liability. For more on the tax credit rules and regulations, visit http://www.nahb.org/generic.aspx?genericContentID=113316.Gorell always encourages homeowners to talk to a tax advisor to review individual situations.
On June 1, the U.S. Energy Tax Credit reverted to the original window and door criteria established in February as part of the American Recovery and Reinvestment Act of 2009. In April, the government had announced that it would allow any ENERGY STAR qualified windows or exterior doors purchased between January 1 and May 31 of 2009 to be eligible for the $1,500 tax credit. The main criteria now is that windows and doors must have a U-value (U-factor) of 0.30 or less and a Solar Heat Gain Coefficient (SHGC) of 0.30 or less. Note: Not all ENERGY STAR qualified windows and doors meet these criteria.
So if you purchased ENERGY STAR qualified windows or doors between January 1 and May 31 of 2009 -- regardless of their U-value and SHGC ratings -- you are eligible for a tax credit up to $1,500. If you purchase them from June 1, 2009 to December 31, 2010, you are eligible for the same tax credit as long as they meet the 0.30/0.30 criteria. There are other criteria, by the way. See ENERGY STAR's web page www.energystar.gov/index.cfm?c=products.pr_tax_credits for more details.
For windows and doors qualifying from January 1, 2009 to May 31, 2009, you can use (for tax purposes) the ENERGY STAR labels that came with them. You can also use applicable Manufacturer's Certification Statements for this period.
From June 1 to December 31, 2010, you cannot use the ENERGY STAR labels for tax purposes; you can only use applicable Manufacturer’s Certification Statements from the manufacturer.
Gorell's statements for both time periods are available on its web site, http://www.gorell.com/pages/energy_tax_incentive_act.htm
