Federal Tax Credit

Tax credits are now available for home improvements:

must be "placed in service" from January 1, 2009 through December 31, 2010
must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
$1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
must have a Manufacturer Certification Statement to qualify
for record keeping, save your receipts and the Manufacturer Certification Statement
improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010

· If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters. More.

SUMMARY OF TAX CREDITS FOR HOMEOWNERS
Product Category	Product Type	Tax Credit Specification	Tax Credit	Notes
Insulation	Insulation	Meets 2009 IECC & Amendments	30% of cost, up to $1,500¹	FAQ on Insulation. Check to see if you have Home Performance with ENERGY STAR in your areas. Adding insulation to your home is covered.
Windows & Doors	Windows, Doors, and Skylights	Before June 1, 2009: Must meet ENERGY STAR criteria After June 1, 2009: U factor <= 0.30 SHGC <= 0.30	30% of cost, up to $1,500¹	Not all ENERGY STAR labeled windows, doors, and skylights qualify for tax credit. More information
Windows & Doors	Storm Windows & Storm Doors	In combination with the exterior window over which it is installed: 1. has a U-factor and SHGC of 0.30 or below 2. Meets the IECC	30% of cost, up to $1,500¹	FAQ on Storm Doors and Storm Windows.
Roofing	Metal Roofs, Asphalt Roofs	All ENERGY STAR qualified metal and reflective asphalt shingles	30% of cost, up to $1,500¹	FAQ on Roofs.
HVAC	Central A/C	Split Systems: SEER >= 16, EER >=13 Package systems: SEER >= 14, EER >= 12	30% of cost, up to $1,500¹	FAQ on Central ACs. FAQ on Air Source Heat Pumps. Note — not all ENERGY STAR products will qualify for the tax credit.
	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 $1,500¹
	Natural Gas or Propane Furnace	AFUE >= 95	30% of cost, up to $1,500¹	FAQ on Furnaces and Boilers. Note — not all ENERGY STAR products will qualify for the tax credit.
	Oil Furnace	AFUE >= 90	30% of cost, up to $1,500¹
	Gas, Propane, or Oil Hot Water Boiler	AFUE >= 90	30% of cost, up to $1,500¹
	Advanced Main Air Circulating Fan	No more than 2% of furnace total energy use.	30% of cost, up to $1,500¹	FAQ: What if the fan qualifies, but the furnace does not?
Water Heaters	Gas, Oil, Propane Water Heater	Energy Factor >= 0.82 or a thermal efficiency of at least 90%.	30% of cost, up to $1,500¹	FAQ on Water Heaters.
Water Heaters	Electric Heat Pump Water Heater	Same criteria as ENERGY STAR: Energy Factor >= 2.0	30% of cost, up to $1,500¹	FAQ on Water Heaters.
Biomass Stove	Biomass Stove	Stove which burns biomass fuel 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 $1,500¹	FAQ on Biomass Stoves.
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	All ENERGY STAR geo-thermal heat pumps qualify for the tax credit. What about water-to-water geothermal heat pumps? Must be “placed into service” before December 31, 2016.
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	All ENERGY STAR solar water heaters qualify for the tax credit. 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	Must be placed in service before December 31, 2016.
Small Wind Energy Systems	Residential Small Wind Turbines	Has nameplate capacity of not more than 100 kilowatts.	30% of cost	Must be placed in service before December 31, 2016.

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

IRS Guidance:

IRS Notice 2009-53 (6/22/2009) Interim guidance for Section 25C

IRS Notice 2009-41 (5/11/2009) Interim guidance for Section 25D