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FEDERAL AND STATE TAX BENEFITS
 
There is an important distinction between a tax deduction and a tax credit. A tax deduction is subtracted from income before total tax liability is computed. A tax credit is subtracted from the total tax liability. This means that they have very different values, with a credit being 3 or more times more advantageous than a deduction. (For example a tax credit of $ 2,000.00 for someone in the 28% bracket is equivalent to a tax deduction of $ 7,142.00.00). It pays to go energy efficient!


FOR EXISTING HOMEOWNERS


A tax credit of up to $ 500.00 for energy improvements is possible.

Federal Tax Credits for Energy Efficiency

Energy Credits for Homeowners


FOR BUILDERS

For new homebuilder a tax credit of $2,000 per home is possible.

For Commercial builders a tax credit of $1.80 per square foot & partial credits also available.

Federal Tax Credits for Energy Efficiency

Energy Credit To Home Builders


SUMMARY OF TAX CREDITS FOR HOMEOWNERS

Product Category Product Type Tax Credit Specification Tax Credit Notes
Windows & Doors Exterior Windows and Skylights U factor <= 0.30

SHGC <= 0.30		 30% of cost, up to $1,5002 NOT All ENERGY STAR labeled windows and skylights qualify for tax credit.
Windows & Doors Storm Windows Meets IECC1 in combination with the exterior window over which it is installed, for the applicable climate zone 30% of cost, up to $1,5002

Manufacturer's Certification Statement3 will list classes of exterior window (single pane, clear glass, double pane, low-E coating, etc.)4 that a product may be combined with to be eligible in specific climate zones.
Windows & Doors Exterior Doors U factor <= 0.30

SHGC <= 0.30		 30% of cost, up to $1,5002

NOT ALL ENERGY STAR DOORS will qualify.
Windows & Doors Storm Doors In combination with a wood door assigned a default U-factor by the IECC1, and does not exceed the default U-factor requirement assigned to such combination by the IECC 30% of cost, up to $1,5002
Roofing Metal Roofs, Asphalt Roofs ENERGY STAR qualified 30% of cost, up to $1,5002

ALL ENERGY STAR labeled metal and asphalt roofs qualify for the tax credit.

Must be expected to last 5 years OR have a 2 year warranty.
Insulation Insulation Meets 2009 IECC & Amendments 30% of cost, up to $1,5002

For insulation to qualify, its primary purpose must be to insulate. (example: vapor retarders are covered, siding does not qualify).

Must be expected to last 5 years OR have a 2 year warranty
HVAC Central A/C Split systems:
EER >=13
SEER >= 16

Package systems:
EER >= 12
SEER >= 14 		30% of cost, up to $1,5002

For a list of qualified products, go to the Consortium for Energy Efficiency product directory, click on the Air Conditioners, and in the "CEE Tier" enter "Residential Advanced Tier 3".

Note: NOT ALL ENERGY STAR products will qualify for the tax credit.

ENERGY STAR specification:
Split systems:
EER >= 12
SEER >= 14.5

Package systems:
EER >= 11
SEER >= 14
HVAC Air Source Heat Pumps Split systems
HSPF >= 8.5
EER >= 12.5
SEER >= 15

Package systems
HSPF >= 8
EER >= 12
SEER >= 14		 30% of cost, up to $1,5002

Note: NOT ALL ENERGY STAR products will qualify for the tax credit.

ENERGY STAR specification:
Split systems:
HSPF >= 8.2
EER >= 12
SEER >= 14.5

Package systems:
HSPF >= 8
EER >= 11
SEER >= 14

HVAC Natural Gas or Propane Furnace AFUE >=95 30% of cost, up to $1,5002

For a list of qualifying products go to the Gas Appliance Manufacturing Association

Note: NOT ALL ENERGY STAR products will qualify for the tax credit.

ENERGY STAR Specification:

Gas Furnaces: AFUE >= 90

Oil Furnaces: AFUE >= 85

Boilers: AFUE >= 85
HVAC Oil Furnace

AFUE >= 90

 30% of cost, up to $1,5002
HVAC Gas, Propane, or Oil Hot Water Boiler

AFUE >= 90

 30% of cost, up to $1,5002
HVAC Advanced Main Air Circulating Fan No more than 2% of furnace total energy use 30% of cost, up to $1,5002

For a partial list of qualifying products go to the Gas Appliance Manufacturing Association
Geo-Thermal Heat Pump Geo-Thermal Heat Pump

Same criteria as ENERGY STAR:

Closed Loop:
EER >= 14.1
COP >= 3.3

Open Loop:
EER >= 16.2
COP >= 3.6

Direct Expansion:
EER >= 15
COP >= 3.5

30% of the cost - NOT subject to $1,500 cap All ENERGY STAR labeled geo-thermal heat pumps qualify for the tax credit.

UseIRS Form 5695

Must be "placed into service" between Jan. 1, 2008 - Dec. 31, 2016.
Water Heaters Gas, Oil, Propane Water Heater Energy Factor >= 0.82 or a thermal efficiency of at least 90%. 30% of cost, up to $1,5002

Note: NOT ALL ENERGY STAR gas storage and gas condensing water heaters will qualify for the tax credit. ALL ENERGY STAR gas tankless models will qualify.

ENERGY STAR criteria:

Gas Storage:
Energy Factor >= 0.62

Gas Tankless:
Energy Factor >= 0.82

Gas Condensing:
Energy Factor >= 0.8

For a partial list of qualifying products go to the Gas Appliance Manufacturing Association

Water Heaters Electric Heat Pump Water Heater Same criteria as ENERGY STAR: Energy Factor >= 2.0 30% of cost, up to $1,5002 All ENERGY STAR qualified electric heat pump water heaters qualify for the tax credit.
Biomass Stove Biomass Stove

Stove which burns biomass fuel5 to heat a home or heat water.

Thermal efficiency rating of at least 75% as measured using a lower heating value.

 30% of cost, up to $1,5002  
Solar Energy Systems Solar Water Heating
  • 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).
 30% of cost, up to $2,000
  • Use IRS Form 5695 
  • Must be "placed in service" before December 31, 2016.
Solar Energy Systems Photovoltaic Systems Photovoltaic systems must provide electricity for the residence, and must meet applicable fire and electrical code requirement. 30% of cost
  • Use IRS Form 5695 
  • Must be "placed in service" before December 31, 2016.
Small Wind Energy Systems Residential Small Wind Energy Systems   30% of the cost

Must be "placed in service" by December 31, 2016.

Use IRS Tax Form 5695 (version 2009). This form should be available in late 2009 or early 2010.

Not limited to $1,500 cap.
Fuel Cells Residential Fuel Cell and microturbine system Efficiency of at least 30% and must have a capacity of at least 0.5 kW. 30% of the cost, up to $1,500 per 0.5 kW of power capacity
  • Must be "placed in service" by December 31, 2016.
  • Use IRS Tax Form 5695 (version 2009). This form should be available in late 2009 or early 2010.
  • Not limited to $1,500 cap.
Cars Hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles
Based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models

There is a 60,000 vehicle limit per manufacturer before a phase-out period begins. Toyota and Honda have already been phased out. Credit is still available for Ford, GM and Nissan.

For more information visit: Fueleconomy.gov

  • Use IRS Form 8910 for hybrid vehicles purchased for personal use.
  • Use IRS Form 3800 for hybrid vehicles purchased for business purposes.
Cars Plug-in hybrid electric vehicles
$2,500-$7,500

The first 250,000 vehicles sold get the full tax credit (then it phases out like the hybrid vehicle tax credits).

Effective January 1, 2009.

1 Either the 2001 Supplement of the 2000 International Energy Conservation Code or the 2004 Supplement of the 2003 International Energy Conservation Code.

2 Subject to a $1,500 maximum per homeowner for all improvements combined.

3 A Manufacturer's Certification is a signed statement from the manufacturer certifying that the product or component qualifies for the tax credit. The IRS encourages manufacturers to provide these Certifications on their website to facilitate identification of qualified products. Taxpayers must keep a copy of the certification statement for their records, but do not have to submit a copy with their tax return.

4 Additional information on exterior window features may be viewed at Anatomy of an Energy Efficient Window.

5 Biomass Fuel means any plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.

The IRS defines "placed in service" as when the property is ready and available for use.



We take great pride in every inspection we perform. When the inspection is over, your inspector will prepare a detailed inspection report regarding the property. 

 
 
 
NAHI (National Association OF Home Inspector-member)
VA# 2705-121547
Certified RESNET Home Energy Auditor
Sam Latif
Ph: (703) 675-5446
Fax: (866) 554-0287
42608 Cochrans Lock Dr
Ashburn, VA 20148
sam@usecoinspections.com