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Extending Residential Energy Tax Credits for
Alternative Heating and Energy Systems
Alternative Heating and Energy Systems
Finally, some of the uncertainty surrounding our country's energy policy has been
alleviated with a schedule of energy tax credits good through 2010. (Links to the
complete summary of Federal and State energy tax credits are listed below).
With the exception of a biomass stove, you may be able to take a credit of 30% of
your costs of qualified solar electric property, solar water heating property, fuel cell
property, small wind energy property, and geothermal heat pump property. This
includes labor costs properly allocable to the on-site preparation, assembly, or original
installation of the property and for piping or wiring to interconnect such property to
the home.
Biomass Stove [30% of cost, up to $1,500*]
Stove which burns biomass fuel to heat a home or heat water with a thermal efficiency
rating of at least 75%.
Biomass fuel is defined as "Any plant-derived fuel available on a renewable or
recurring basis, including agricultural crops (corn) and trees, wood and wood waste
and residues (including wood pellets), plants (including aquatic plants), grasses,
residues, and fibers."
*Subject to a $1,500 maximum per homeowner for all improvements combined (storm
windows, doors, roofing, insulation, etc.) Although Indoor Biomass Furnaces and
Boilers are not specifically mentioned, they would probably also qualify for this credit.
Check with the furnace dealer or your accountant to make sure.
Geo-Thermal Heat Pump [30% of the cost - NOT subject to $1,500 cap]
Frankly, the old $1,500 wasn't much incentive to purchase a $40,000 system, but a
$12,000 (30%) credit is. Especially when you consider a geothermal heat pump will
deliver as much as $5.50 in heating or cooling for every $1 spent on electricity.
Solar Water Heating [30% of cost, up to $2,000]
At least half of the energy generated by the “qualifying property” must come from the
sun. Homeowners may only claim spending on the solar water heating system
property, not the entire water heating system of the household. The credit is not
available for expenses for swimming pools or hot tubs. The water must be used in the
dwelling.
The system must be certified by the Solar Rating and Certification Corporation (SRCC)
and placed in service before December 31, 2016. The IRS defines "placed in service" as
when the property (installed equipment) is ready and available for use.
Photovoltaic Systems [30% of cost - The $2,000 cap no longer applies]
Photovoltaic systems must provide electricity for the residence, and must meet
applicable fire and electrical code requirements. Must be placed in service before
December 31, 2016.
Photovoltaic systems (solar panels for electricity), at best, convert only 18% of the
sun's rays to electricity. This relative inefficiency is why you need so many panels to
put a noticeable dent in your electric bill. So until someone comes up with a 30%
efficient solar panel, the 30% tax credit will put a sizeable dent in a typical $20,000
installation.
Radiant Hydronic Heating
Radiant hydronic heating isn't specifically mentioned either on the tax credit schedule,
but a solar water heater, as mentioned above, used for radiant home heating would
qualify for the credit. Check with your local radiant heat contractor to find out how
much of the entire system is eligible for a tax break.
Residential Small Wind Energy Systems [30% of the cost - Not limited to $1,500 cap]
Must be placed in service before December 31, 2016.
The removal of the tax credit cap for marginal energy producers like residential wind
reduces the payback period to the point where it's economically feasible for more
homeowners.
Don't forget to avail yourself of rebates, tax credits or outright grants form your state
and local government. Renewable energy systems are also exempt from the sales tax
in many states.
No matter what type of system you purchase, verify the anticipated tax credit with
your accountant before signing a formal agreement with your energy contractor.
Related Articles:
alleviated with a schedule of energy tax credits good through 2010. (Links to the
complete summary of Federal and State energy tax credits are listed below).
With the exception of a biomass stove, you may be able to take a credit of 30% of
your costs of qualified solar electric property, solar water heating property, fuel cell
property, small wind energy property, and geothermal heat pump property. This
includes labor costs properly allocable to the on-site preparation, assembly, or original
installation of the property and for piping or wiring to interconnect such property to
the home.
Biomass Stove [30% of cost, up to $1,500*]
Stove which burns biomass fuel to heat a home or heat water with a thermal efficiency
rating of at least 75%.
Biomass fuel is defined as "Any plant-derived fuel available on a renewable or
recurring basis, including agricultural crops (corn) and trees, wood and wood waste
and residues (including wood pellets), plants (including aquatic plants), grasses,
residues, and fibers."
*Subject to a $1,500 maximum per homeowner for all improvements combined (storm
windows, doors, roofing, insulation, etc.) Although Indoor Biomass Furnaces and
Boilers are not specifically mentioned, they would probably also qualify for this credit.
Check with the furnace dealer or your accountant to make sure.
Geo-Thermal Heat Pump [30% of the cost - NOT subject to $1,500 cap]
Frankly, the old $1,500 wasn't much incentive to purchase a $40,000 system, but a
$12,000 (30%) credit is. Especially when you consider a geothermal heat pump will
deliver as much as $5.50 in heating or cooling for every $1 spent on electricity.
Solar Water Heating [30% of cost, up to $2,000]
At least half of the energy generated by the “qualifying property” must come from the
sun. Homeowners may only claim spending on the solar water heating system
property, not the entire water heating system of the household. The credit is not
available for expenses for swimming pools or hot tubs. The water must be used in the
dwelling.
The system must be certified by the Solar Rating and Certification Corporation (SRCC)
and placed in service before December 31, 2016. The IRS defines "placed in service" as
when the property (installed equipment) is ready and available for use.
Photovoltaic Systems [30% of cost - The $2,000 cap no longer applies]
Photovoltaic systems must provide electricity for the residence, and must meet
applicable fire and electrical code requirements. Must be placed in service before
December 31, 2016.
Photovoltaic systems (solar panels for electricity), at best, convert only 18% of the
sun's rays to electricity. This relative inefficiency is why you need so many panels to
put a noticeable dent in your electric bill. So until someone comes up with a 30%
efficient solar panel, the 30% tax credit will put a sizeable dent in a typical $20,000
installation.
Radiant Hydronic Heating
Radiant hydronic heating isn't specifically mentioned either on the tax credit schedule,
but a solar water heater, as mentioned above, used for radiant home heating would
qualify for the credit. Check with your local radiant heat contractor to find out how
much of the entire system is eligible for a tax break.
Residential Small Wind Energy Systems [30% of the cost - Not limited to $1,500 cap]
Must be placed in service before December 31, 2016.
The removal of the tax credit cap for marginal energy producers like residential wind
reduces the payback period to the point where it's economically feasible for more
homeowners.
Don't forget to avail yourself of rebates, tax credits or outright grants form your state
and local government. Renewable energy systems are also exempt from the sales tax
in many states.
No matter what type of system you purchase, verify the anticipated tax credit with
your accountant before signing a formal agreement with your energy contractor.
Related Articles:
- Federal Energy Tax Credits
The NEW schedule of Federal energy tax credits.
State Energy Tax Credits
Database of State incentives for renewable energy.
Do It Yourself Energy Audit
The first web based do-it-yourself energy audit tool.
Energy Efficient Mortgages
