Federal funding for energy efficiency will be a big incentive, if not the primary reason, for home improvements this year. As a contractor, knowing the ins and outs of these incentives could make all the difference in client interviews. Because tax code is never the easiest thing to read, the NAHB has put together a website to explain the details. (more…)

Now that tax credits for energy efficient home improvements have been extended and the credit limits increased, homeowners have even more incentive to go green. But, will this bring you more business? That depends.

If a homeowner was planning a second story addition or a new wrap-around redwood deck, those plans might slide down the list of priorities and get stuck on the back burner for a year or two. The homeowner may instead choose to take advantage of the 2009-2010 residential energy efficient tax credits. The time limitation definitely creates a sense of urgency and may put all other projects on hold.

So, it depends on your forte. If your identity is strictly associated with decking then business may slow down a bit – you may want to add some new tools to your belt and wear a different hat. The good news is a lot of homeowners will be saving a ton of money on their energy bills after their green renovations are complete and they’ll be ready for that new deck in no time.

If your forte is in insulation, windows, doors, roofing, solar, HVAC, piping, and anything else related to the tax credits then you should see more jobs coming your way. In fact, congressional estimates show that the new expanded tax incentives will increase total remodeling activity by over $6 billion.

As far as energy consumption goes, it’s the older houses that need retrofitting much more then all those aggressive efficiency goals for new homes. Look in the neighborhoods where the homes were built in the 20’s, 30’s, and 40’s, and you’ll find single pane windows, poor weather stripping, and old doors that aren’t energy efficient.

Per a study conducted for the California Homebuilding Foundation last fall, 70% of the greenhouse gas emissions related to single-family envelope energy consumption is attributed to homes built prior to 1983. The study demonstrated that pending $10,000 retrofitting a 1960’s home could save 8.5 tons of carbon.

So, take advantage of the stimulus package and go after homeowners living in old homes.

Recap of the new tax incentives for non-business energy property:

• The 10% credit for building envelope components is increased to 30%.
• All energy property that was previously eligible for $50, $100, and $150 credits is now eligible for a 30% credit.
• The $500 lifetime cap ($200 for windows) has been replaced with a combined $1,500 cap for 2009 and 2010.

Some changes have been made to the standards that property must meet in order to qualify for the credit. The changes take effect for property placed in service after 2009, except for the change regarding biomass fuel stoves:

• Insulation must meet the prescriptive criteria for that material or system established by the 2009 International Energy Conservation Code – as in effect on February 17, 2009.
• Exterior windows, doors, and skylights must have U factor equal to or below 0.30 and a solar heat gain coefficient (SHGC) of 0.30.
• Electric heat pumps must meet these standards:

A seasonal energy efficiency ratio (SEER) greater than or equal to 15, energy efficiency ratio (EER) greater than or equal to 12.5, and heating seasonal performance factor (HSPF) greater than or equal to 8.5 for split heat pumps.

A SEER greater than or equal to 14, EER greater than or equal to 12, and HSPF greater than or equal to 8.0 for packaged heat pumps.

• Central air conditioners must meet these standards:

A SEER greater than or equal to 16 and EER greater than or equal to 13 for split systems.

A SEER greater than or equal to 14 and EER greater than or equal to 12 for packaged systems.

• Propane, natural gas, or oil water heaters must have either an energy factor of at least 0.82 or a thermal efficiency of at least 90%.
• Biomass fuel stoves that burn biomass fuel to heat a dwelling, or to heat water for use in the dwelling that the tax payer uses as a residence, must have a thermal efficiency rating of at least 75%.
• Furnaces and boilers – there are 6 categories:

Qualified natural gas furnace means any natural gas furnace that achieves an annual fuel utilization efficiency rate of not less than 95.

(more…)