Tax credits

Step 1: Build your home to be 50% more efficient

Contact your local H.E.R.S. Rater:
http://www.hersrater.net/

Step 2: Use Apex Foam Insulation

The use of Apex Foam maximizes the results of energy efficiency in foam insulation.

Step 3: Have your home H.E.R.S. tested

For more information visit:
http://www.energystart

Step 4: Fill out IRS form 8908 and submit with your tax returns

For more information visit:
http://www.irs.gov/

Step 5: Retain your copies of the certificates from your H.E.R.S. Rater above.

• How many tax credits are there?  There are two tax credits and a tax deduction.  There is a tax credit for builders on new construction, a tax credit for homeowners who make energy efficient upgrades to their existing homes, and a tax deduction for commercial property owners who reduce energy consumption of their buildings.
• How does a builder get the new construction tax credit?  A builder must design the house to be 50% more efficient than a model IECC home.  You can use numerous approved computer software to accomplish this.  You must then build the home to those specifications and have an energy rater come out at do a performance test on the house.
• How does foam insulation fit into the new construction tax credit?  The tax credit requires that 1/5 of the efficiency come from building envelope components.
• Do I have to turn in new paperwork to the IRS to qualify for either of the two tax credits?  No you must keep your receipts and your documentation that your home meets the standards but you do not have to file a ton of new paperwork.
• What is the new construction tax credit?  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.  These tax credits apply to new homes whose construction is substantially completed after August 8, 2005 and that are acquired from the eligible contractor after December 31, 2005 and before January 1, 2008, for use as a residence. Contact your senators and ask them to extend this.
• What is a tax credit? You don't receive an income tax credit when you buy the product, like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.
• Tax credits vs. tax deductions: In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – such as those for home mortgages and charitable giving – lower your taxable income. If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.
• What energy-efficient home improvements are eligible for existing homes? The overall $500 cap can be reached in several ways with the purchase and installation of energy-efficient products:
• Exterior windows: 10 percent of the total cost, up to $200. Includes skylights and storm windows.
• Insulation, exterior doors, or pigmented metal roofs: 10 percent of the cost of the product (but not the installation), up to $500. Includes seals to limit air infiltration, such as caulk, weather stripping, and foam sealants, as well as storm doors.
• Central air conditioner, heat pump, or water heater: up to $300 towards the full purchase price, including installation costs.
• Furnace or boiler: up to $150 towards the full purchase price, and/or $50 for an efficient air-circulating fan in a furnace, including installation cost.
• When are they available? The home improvement tax credits apply for improvements "placed in service" from January 1, 2006, through December 31, 2007. They are not available in 2005. The IRS defines "placed in service" as when the products or materials are ready and available for use – this would generally refer to the installation, not the purchase.