The site covers the two important stimulus components for homebuilders and owners: the Existing Home Retrofit Tax Credit and The Wind, Solar, Geothermal and Fuel Cell Tax Credit. The credits are broken into categories (Windows and Doors, Insulation, etc.) with explanations for each category, including how a project qualifies for its corresponding tax credit. A PDF is also available for download and printing.

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.

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

Qualified oil furnace means any oil furnace that achieves an annual fuel utilization efficiency rate of not less than 90.

Qualified natural gas hot water boiler means any natural gas hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.

Qualified propane hot water boiler means any propane hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.

Qualified oil hot water boiler means any oil hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.

The above is effective for property placed in service after February 17, 2009. The change for biomass fuel stoves takes effect for tax years beginning after December 31, 2008.

Energy efficient property credit limitations, effective for tax years beginning after December 31, 2008:

Taxpayers are allowed a non-refundable residential energy efficient property (REEP) tax credit for 30% of expenditures made during the tax year for qualified solar water heating, geothermal heat pump, fuel cell, small wind energy, and solar electric property. This includes labor costs properly allocable to the onsite preparation, assembly, or original installation of the property and for piping or wiring to interconnect such property to the home.

Previously, the tax credit was limited to:

• $2,000 for qualified solar electric property costs;
• $2,000 for qualified solar water heating property costs;
• $500 for each one-half kilowatt of capacity of qualified fuel cell property for which qualified fuel cell property costs are paid (no limits);
• $500 for each one-half kilowatt of capacity of qualified small wind energy property for which qualified small wind energy property costs are paid (not to exceed $4,000) and;
• $2,000 for qualified geothermal heat pump property costs.

New for tax years beginning after December 31, 2008 – There is no dollar limit for solar electric property. The new law eliminates the REEP credit caps for qualified solar water heating, geothermal heat pump, and small wind energy property but retains the credit cap for quailed fuel cell property.

A few other things to remember:

• A qualified “home” includes a house, houseboat, mobile home, cooperative apartment, condo, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards.
• Garage doors are eligible for tax credit – doors installed in 2009 or 2010 may be eligible for the tax credit provided the door is installed in or on an insulated garage as a component of the home, the garage door meets the other requirements of the tax credit, i.e. it has a U factor <= .3 and a SHGC <= .3, and the garage door is certified by the manufacturer.
• Tax credits do not offset self employment tax, social security tax, or IRA’s, so cover your bases and make sure your customer is informed.

Sources:

http://www.homefinder.com/content/Blog:Retrofitting_Older_Homes_to_be_More_Green

Form 5695
http://www.irs.gov/pub/irs-pdf/f5695.pdf

http://www.qualifiedremodeler.com/online/article.jsp?siteSection=21&id=1246&pageNum=2

http://www.creative-architect.com/pdf/Energy-Efficient%20Improvements.pdf