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Tax credits for energy efficient housing improvements

Posted by Andrew Chan  February 25, 2009 12:00 PM

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I'd like to know if the homeowner's energy credit still exists. I thought for 2008 the credit had ended but had heard for 2009 it was to be reinstated. I had energy-star-rated storm windows installed in my home in 2008. Can I take a credit for that year or might it be better to take it in 2009?

The Energy Tax Incentives Act of 2005 (“the Energy Act of 2005”) provided tax credits, deductions and incentives for individuals and businesses to encourage energy efficiency and conservation. While many of the provisions of the Energy Act of 2005 were effective in August of that year, the tax credits for consumers who make certain energy efficient home improvements were not effective until 2006 and 2007. These credits expired at the end of 2007 but were extended and modified under The Emergency Economic Stabilization Act of 2008 and the American Recovery and Reinvestment Act of 2009. The extensions and modifications, however, do not apply to 2008. Therefore, the tax credits are not available for consumers who installed high-efficiency heating and cooling systems, water heaters, windows, doors, and insulation in 2008.

Unfortunately, it seems that you do not qualify for the tax credit. Based on the information in your question, you installed your windows in the year that the credit expired. In order to qualify for the tax credit in 2009, the IRS requires the improvement to have been placed in service in 2009. The IRS defines “placed in service” as the date in which the property is ready and available for use.

The Department of Energy and the Environmental Protection Agency provide a good summary of the energy efficiency tax credits on their Energy Star web site (http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#c1).

For more information on how to apply for the Energy Star rebates or tax credit, visit the following Energy Star and IRS web sites.
- Energy Star rebates & credits: http://www.energystar.gov/index.cfm?c=windows_doors.pr_taxcredits

- IRS Form 5695 (Residential Energy Efficient Property Credit): http://www.irs.gov/pub/irs-pdf/f5695.pdf

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