Substantial Energy Credits — Continued

Geothermal credits

Quote from the IRS…

“Residential energy efficient property credit. Beginning in 2009, there is no limitation on the credit amount for qualified solar electric property costs, qualified solar water heating property costs, qualified small wind energy property costs, and qualified geothermal heat pump property costs…”

Geothermal energy systems are based on the earth being a constant temperature once you get about 10 feet below the surface of the ground. If you can capture that heat, and run it through a heat exchanger, you can heat your home for essentially the cost of running a fan. You also can cool your home in summer with the same system and get hot water as a bonus. Couple it with a solar energy system to generate the electricity and you can substantially reduce your carbon footprint. It works best with a forced hot air heating system.

All in all this is not a bad deal.

Last year I talked with a company that installs residential geothermal energy systems. Part of my conversation with them was a question about tax credits and the response was “there aren’t any”. That changed in February when the stimulus package was signed. Now you can get 30% of the installation cost of a geothermal energy system back in the form of a federal tax credit. And there is no limit how much your credit can be. Just remember you still pay for 70% of the cost of the system.

Like the other energy credits, you use Form 5695 to claim this one. This is not a refundable credit so you need to have a substantial tax liability to take advantage of the credit.

Here are some links that explain more:

This one is from the Union of concerned Scientists:
http://www.ucsusa.org/clean_energy/technology_and_impacts/energy_technologies/how-geothermal-energy-works.html

This is from Wikipedia:
http://en.wikipedia.org/wiki/Geothermal_heating

Here is a link to a government website where you can search for grants.
http://www.grants.gov/

There are plenty of additional links on Google or any other search engine.

New Solar Energy Credits

The new stimulus law has expanded the credit available for alternative energy improvements. This incorporates solar, wind, and geothermal investments. The credit is 30% of your cost for the systems. The tax credit can cover any home used as a residence by the taxpayer, but it does not have to be your principal residence. So your vacation home can qualify.

This blog will cover the solar credit which includes the generation of electricity, heating water, and some resources for information on solar power.

As I mentioned, the credit is 30% of the cost of the solar system. The system must be installed by December 31, 2016, so you have plenty of time to put the system in place. You can use it for generating electricity or hot water.

In addition many states offer a credit for energy improvements including solar power. Here is a link to a database that details these credits: http://www.dsireusa.org/

Try Wikipedia for some general information on solar power. Here is that link: http://en.wikipedia.org/wiki/Solar_power

The American Solar Energy Society is an industry association which provides information on solar energy. It has 12,000 members from solar professionals to grass root enthusiasts. They are located at http://www.ases.org/

You can Google “Solar Power” and get about 30,000,000 hits. That should keep you busy for the weekend.

Residential Energy Credits

Now you see them, now you don’t.  Wait!! Now you see them again.

Those elusive homeowner energy credits are back.  They were available until the end of 2007 and then disappeared in 2008 only to return with the various stimulus packages in 2009.

The energy credit is fairly simple:  You get a credit on your federal income taxes of 30% of the cost of qualified energy products you install in your home in 2009 and 2010.  Qualified products include new windows and insulation, as well as energy efficient heating and air conditioning systems.  The items installed must meet new higher standards of energy efficiency.  The credit applies to the cost of the product but not to the cost of labor for of the installation. 

The maximum total credit you can claim is $1500 (or 30% of $5000). The credit can be used only once, so you cannot claim $1500 in 2009 and then again in 2010. You file form 5695 with your 2009 or 2010 tax return.  This is not a refundable credit, which means that if you owe $1000 in income taxes and qualify for a $1500 credit, you will not get a check for $500 from the IRS.  It also cannot be applied to other taxes such as the self-employment tax.

The IRS has not provided a whole lot of guidance on this credit yet.   Based on various sources, the credit applies only to home improvements and not the construction of a new home.  Other details may change as the year progresses.

A final note:  The manufacturer must give you certification that the property satisfies the standards set in the new law.  Be sure to keep the certifications as well as the receipts for the cost of your products.

 

Energy TAx Credits

This blog is the start of a series on the energy tax credits enacted in February 2009.  I will be discussing the residential energy credits for insulation and new windows, a new credit for geothermal heating and cooling, solar credits, and even home sized wind turbines.  I will also discuss electric car credits.

Ah the wonders of the internet!!  This was posted from San Francisco