Energy Tax Credits

[Harley]

I had someone ask me the other day about the Federal Energy Tax Credit.

Though not really Hearth related.... thought I'd throw out a "general reminder"... In case some out there are procrastinators (like me).

The credit, unless renewed will only count if the work is completed by December 31, 2007.

In a nutshell, you can receive a federal tax credit (up to $500) for the replacement of certain energy saving doors, windows, insulation and heaters). No.... unfortunately woodstoves don't qualify. New construction doesn't qualify for the credit either.

 

[begreen]

Caveat, not collectible if AMT bites you first. Uncle giveth with one hand and takes away with the other.

 

[webbie]

Right, the AMT deal is a big deal, since most anyone making enough to blow $$$ on solar power ends up hitting the AMT.

Harley, are you talking about the solar and wind credits also, or just the $500?

That is a big deal that they didn't exclude it from AMT. Isn't mortgage interest and just certain Tax free bonds...the only two things that don't get hit by AMT?

 

[Harley]

Hmmm... that's wierd - I didn't notice there were any responses.... the "folder" was light blue... does it turn out by itself after a few days?....

Anyway - yeah I was just talking about the $500 credit, since someone had asked me about it the other day, so like I said, just threw it up as a reminder in case anyone might be on the fence on some home improvement projects.

As far as AMT - yup - you are both right - it can be very complicated as to the add-backs, etc., and if you get hit with it, how you could get credit for it in the future in a non-AMT year. It would be impossible to try to cover every person's own scenario here (I don't think you have enough server space to do that).

I probably should have qualified the comment by saying.... "check with your own tax advisor" :zip:

 

[Eric Johnson]

Alright, Harley, here's a couple of questions that you may or may not be willing to answer:

It doesn't apply to stoves, but how about high-efficiency primary central heating appliances? I'm told that in NYS, the credit is $400.

And how about insulation? If I spend $500 on pipe insulation before Dec. 1, can I claim the credit for that?

 

[Harley]

Alright, Harley, here's a couple of questions that you may or may not be willing to answer:

It doesn't apply to stoves, but how about high-efficiency primary central heating appliances? I'm told that in NYS, the credit is $400.

And how about insulation? If I spend $500 on pipe insulation before Dec. 1, can I claim the credit for that?

This is for the fed credit - If I can later, I'll try to take a look at the NYS stuff.

As far as the credit for the "Energy Property", which in your case would be the furnace itself.... as I read it, unfortunately you would not qualify, since the reference is specific and only includes high efficiency electric or geothermal heat pumps, certain central air conditioners, natural gas, propane or oil water heaters and furnaces. (or a new electric fan <for what I'm assuming would be used on a central heating/cooling unit>)


As far as the insulation... don't forget - the credit is 10% of the cost (but that 10% is $ for $ off your taxes), so the $500 spent for insulation would get you a $50 tax credit.

Does the pipe insulation qualify? Well, from a strict reading of the definition, my gut would say no, since insulation falls in the class of "eligible building envelope components". Could you make an arguement that your's does qualify, or at least meet the intent of the credit, if you were to take it and then be audited? I'd probably say yes. The actual wording is:

The credit for qualified energy efficiency improvements is allowed with respect to the following building envelope components (Eligible Building Envelope Components):
(1) An insulation material or system (including any vapor retarder or seal to limit infiltration) that--
(a) Is specifically and primarily designed (within the meaning of section 4.04 of this notice) to reduce heat loss or gain of a dwelling unit when installed in or on the dwelling unit; and
(b) May be taken into account in determining whether the building thermal envelope requirements established by the IECC are satisfied;

The IRS publication (for some leisure reading) is:
http://www.irs.gov/pub/irs-drop/n-06-26.pdf

 

[Eric Johnson]

Thanks, Harley. Don't worry about NYS--I believe that's as I stated.

I'll have to think about the "building envelope" caveat. Thanks for pointing that out.

 

[Harley]

I did a quick look at the NYS site. The only Home heating system credit I found so far was a $500 for a new system, but the system has to be "energy star" labeled.

This is the form to take that credit, but I'm thinking that wouldn't apply to you:
http://www.tax.state.ny.us/pdf/2006/fillin/inc/it240_2006_fill_in.pdf

 

[Jay H]

And how about insulation? If I spend $500 on pipe insulation before Dec. 1, can I claim the credit for that?

I got my $50 tax credit for the 2006 taxyear, it wasn't hard though I had to scrounge up some Lowes and Home Depot receipts to check the costs..

Jay