Home Energy Tax Credits Saved by the Fiscal Cliff
For several years, the United States offered energy-efficiency tax credits for homeowners and a tax credit for builders of new energy-efficient homes. These tax credits both expired at the end of 2011, but lobbyists continued to fight for them, and as the fiscal cliff loomed at the end of 2012, the lobbyists saw an opportunity and grabbed it.
As part of the deal to prevent the country from falling over the fiscal cliff, Congress extended the calendar for the energy-efficiency tax credit to the end of 2013. This is good news for homeowners, who now have access to a $500 tax credit that can be applied to the following eligible equipment:
- heat pump water heaters with a minimum EF of 2.0
- gas-fired or oil-fired water heaters with a minimum EF of 0.82
- gas-fired or oil-fired furnaces or boilers with a minimum AFUE of 95
- certain energy-efficient air conditioners and air-source heat pumps
- some types of windows and doors
- certain air-sealing materials and insulation materials
- Energy Star roofing materials
Another available tax credit is worth 10% of the cost of upgrading a building’s outer shell, or “envelope.” This $500 tax credit is available for the following improvements:
- insulation materials and systems designed to reduce a home's heat loss or gain
- exterior doors and windows
- pigmented metal roofs designed to reduce heat gain, and asphalt roofs with appropriate cooling granules
Further, homeowners also have access to a tax credit of 30% of the cost of residential wind turbines, photovoltaic (PV) systems, solar water heat systems, and ground-source heat pumps. This tax credit won’t expire until 2016.
For Home Builders
Like the tax credit for homeowners, the tax credit for builders of new energy-efficient homes was put back on the table at the end of 2012, and won’t expire until the end of 2013.
From the Database of State Incentives for Renewables & Efficiency:
- Site-built homes can qualify for a $2,000 credit if they are certified to reduce heating and cooling energy consumption by 50% relative to the International Energy Conservation Code (IECC) 2006
- Manufactured homes can qualify for a $2,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards
- Manufactured homes qualify for a $1,000 credit if they conform to Federal Manufactured Home Construction and Safety Standards and reduce energy consumption by 30% relative to IECC 2006.
- Alternatively, manufactured homes can also qualify for a $1,000 credit if they meet Energy Star Labeled Home requirements
Given President Obama’s commitment to green energy and energy efficiency, it is likely that he will push to have these tax credits extended beyond 2013. But they’re here right now, for homeowners and builders to take advantage of. The benefits of having a more energy-efficient home and the opportunity for a substantial tax credit make the improvements a win-win.