Federal tax credits for new homes
Homebuilders receive a tax credit of $2,000 for homes that reduce energy use for heating and cooling only--not hot water--by 50 percent compared to the national model code, as per the 2004 IECC (International Energy Conservation Code) Supplement. This assumes the use of a 13-SEER (seasonal energy efficiency ratio) air conditioner.
Producers of manufactured homes can also choose to qualify for a tax credit of $1,000 for homes that save 30 percent. This $1,000 credit for reaching 30 percent savings is not available for site-built homes, which must reach the 50 percent savings tier to qualify for the $2,000 credit.
Federal tax credits for existing homes
This section provides tax credits for homeowners, including HUD (U.S. Department of Housing and Urban Development) manufactured homes and condos, for installations completed in 2006 and 2007. Homeowner-builders who are not able to use the builder tax credit should be able to qualify for these credits, unless the IRS disqualifies new construction. These provisions offer cost-based incentives of 10 percent of the amount expended by the taxpayer for "Qualified Energy Efficiency Improvements" and up to $300 for "Qualified Energy Property" up to a maximum credit limit of $500.
"Qualified Energy Efficiency Improvements" are specifically defined as:
• Any insulation material or system specifically designed to reduce heat loss or gain
• Exterior windows (including skylights)
• Any metal roof having pigmented coatings specifically designed to reduce heat gain, which meet Energy Star program requirements.
• Exterior doors
"Qualified Energy Property" is defined as:
• Electric heat pump water heater with EF (efficiency factor) of 2.0 or greater
• Electric air-source heat pumps with HSPF (heating seasonal performance factor) of 9.0 or greater
• Geothermal heat pumps
• Closed loop products with EER (energy efficiency rating) of 16.2 and COP (coefficient of performance) of 3.3 or greater
• Open loop products with EER of 14.1 and COP of 3.3 or greater
• DX (direct expansion) products with EER of 15 and COP of 3.5 or greater
• Central air conditioner that receives the highest efficiency tier established by the Consortium of Energy Efficiency as of Jan. 1, 2006
• Natural gas, propane or oil water heater with EF of 0.80 or greater
• Natural gas, propane or oil furnace, or hot water boiler with AFUE (annual fuel utilization efficiency) of 95 percent or greater
• Advanced main air circulating fan used in natural gas, propane or oil furnace that uses no more than 2 percent of the total annual energy use of the furnace.
Credit limitations on qualified energy property are as follows:
• $50 for any advanced main air circulating fan
• $150 for any qualified natural gas, propane, or oil furnace or hot water boiler
• $300 for any item of qualified energy property.
For information on federal and state tax credits for renewable energy sources, see the article entitled "Solar Tax Credits" in the directory's Solar Energy Systems section.
Resources
[Maggie Leslie is treasurer of the Western North Carolina Green Building Council and is a consultant for builders interested in high performance and green building with an Asheville-based HERS Rater, Home Energy Partners. She can be contacted at Mleslie@HomeEnergyPartners.com or 350-1155, ext. 305.]
