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Energy Tax Credits
Energy Tax Credit Information

Contractors who build new energy-efficient houses can claim a new tax credit worth up to $2,000 for homes that are substantially complete starting the day President Bush signs the bill into law.


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Important Notice:

Tax Credit for Commercial Buildings:

A tax deduction of up to $1.80 per square foot is available to owners or designers of new or existing commercial buildings that save at least 50% of the heating and cooling energy of a building that meets ASHRAE Standard 90.1-2001. Partial deductions of up to $.60 per square foot can be taken for measures affecting any one of three building systems: the building envelope, lighting, or heating and cooling systems. These deductions are available for buildings or systems placed in service from January 1, 2006, through December 31, 2007.

Tax Credits for Homeowners (see table below):

Taxpayers can claim tax credits totaling $500 in 2006 and 2007 for money spent on existing homes to upgrade heating systems, insulation, windows, doors and thermostats, caulk leaks, install pigmented metal roofs and otherwise cut energy waste.

Write-offs for replacement windows are capped at $200, however, while the credit for high-efficiency central air-conditioning, heat pumps and water heaters is capped at $300.

C.L.I. will be able to perform energy analysis (certification) for the upcoming 2006 Tax Credits. The analysis will be able to be rated after January 1, 2006. If you are considering updates to your home for tax credits, please contact our office for further information or to arrange to have an analysis performed. The tax credits are complicated and may require the advice of your tax consultant.

Tax Deductions Must Be Certified

Energy Efficient Home Credit IRC Sec. 45L and List of Eligible Software Programs for Certification

For a homebuilder to qualify for the New Energy Efficient Home Credit under IRC Sec. 45L, they must receive a certification that the dwelling unit has met the energy savings requirements of Sec. 45L. An eligible certifier must use an approved Software Program to calculate the dwelling unit’s energy consumption for purposes of Sec. 45L.  Sec. 45L provides a $2,000 credit for a traditional free-standing home and either a $1,000 or $2,000 credit for a manufactured home depending on the level of energy savings achieved.

IRS Notice 2006-27 (Section 5) and Notice 2006-28 (Section 6) provide for the Service to create and maintain a list of software programs that have been accepted by the Service for use in computing energy consumption for the purpose of certifications under Sec. 45L.  An accepted software program will appear on the above list when the software developer submits the following information to both the IRS and RESNET.

  1. The name, address, and telephone number of the software developer;
  2. The name or other identifier of the program as it will appear on the list;
  3. The test results, test runs and the software program with which the test was conducted;
  4. A declaration by the developer of the software program, made under penalties of perjury, that the software program has satisfied all tests required to conform to the software accreditation process prescribed in RESNET Publication No. 05-001 (Nov. 17, 2005).

 

Eligible Software Programs

Application

Vendor

Contact

Website

EnergyGauge® USA version 2.5 Florida Solar Energy Center Tei Kucharski EnergyGauge
REM/Rate v.12.2 Architectural Energy Corporation David Roberts, P.E. Architectural Energy Corporation
MICROPAS7 v7.1 Enercomp, Inc. Ken Nittler and Robert Scott MICROPAS
Builder Energy Solutions Calculator Owens Corning Dwight Shuler Owens Corning

Tax Credits for Home Builders:

Home builders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50 percent energy savings for heating and cooling over the 2004 International Energy Conservation Code (IECC) and supplements. At least 1/5 of the energy savings must come from building envelope improvements. This credit also applies to contractors of manufactured homes conforming to Federal Manufactured Home Construction and Safety Standards.

There is also a $1,000 tax credit to the producer of a new manufactured home achieving 30 percent energy savings for heating and cooling over the 2004 IECC and supplements (at least 1/3 of the savings must come from building envelope improvements), or a manufactured home meeting the requirements established by EPA under the ENERGY STAR program.

These tax credits apply to qualified new homes built or produced 1/1/2006 through 12/31/2007.

 

ENERGY POLICY ACT OF 2005
DRAFT SUMMARY OF TAX CREDITS FOR HOMEOWNERS¹
(US Treasury has not yet provided final interpretation for IRS use)

Product Category Product Type Tax Credit Specification Tax Credit ENERGY STAR Specification
Windows Exterior Windows Meet 2000 IECC & Amendments 10% of cost not to exceed $200 total Climate dependant - 4 Zones
Skylights Meet 2000 IECC & Amendments 10% of cost not to exceed $200 total Climate dependant - 4 Zones
Exterior Doors Meet 2000 IECC & Amendments 10% of cost not to exceed $500 Climate dependant - 4 Zones
Roofing Metal Roofs ENERGY STAR qualified 10% of cost not to exceed $500 Minimum Solar Reflectance
Insulation Insulation Meet 2000 IECC & Amendments 10% of cost not to exceed $500 Meets FTCs "home insulation" definition
HVAC Central A/C EER 12.5/SEER 15 Split Systems
EER 12/SEER 14 Package systems
$300 EER 11.5/ SEER 14 Split systems
EER 11/SEER 14 Package systems
Air Source Heat Pumps HSPF 9 EER 13 SEER 15 $300 HSPF 8.2 EER 11.5 SEER 14 Split
HSPF 8 EER 11 SEER 14 Package
Geo-Thermal Heat Pump EER 14.1 COP 3.3 Closed Loop
EER 16.2 COP 3.6 Open Loop
EER 15 COP 3.5 Direct Expansion
$300 EER 14.1 COP 3.3 Closed Loop
EER 16.2 COP 3.6 Open Loop
EER 15 COP 3.5 Direct Expansion
Gas, Oil, Propane Water Heater Energy Factor 0.80 $300 N/A
  Electric Heat Pump Water Heater Energy Factor 2.0 $300 N/A
  Gas, Oil, Propane Furnace or Hot Water Boiler AFUE 95 $150 AFUE 90 for furnaces
AFUE 85 for boilers
  Advanced Main Air Circulating Fan No more than 2% of furnace total energy use $50 N/A

¹ For calendar years 2006 and 2007 only.

Source: Energy Star

 

 
 

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