FEDERAL TAX CREDIT

For Energy Efficiency

On Feb. 17, 2009, President Obama signed The American Recovery and Reinvestment Act of 2009 that made some significant changes to federal income tax credits to consumers who make energy efficient home improvements such as installing qualifying furnaces, boilers and water heaters. The qualified equipment must be “placed in service” no earlier than January 1, 2009, and no later than December 31, 2010. The IRS defines “placed in service” as when the property (equipment) is ready and available for use. The specific criteria and corresponding tax credit are described below.

Tax Credits for Consumers:

Tax credits are now available for home improvements:

• must be "placed in service" from January 1, 2009 through December 31, 2010
• must be for taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes and rentals qualify)
• $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
• must have a Manufacturer Certification Statement to qualify
• improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) - it will be available late 2009 or early 2010

**Please note, not all ENERGY STAR qualified homes and products qualify for a tax credit. These tax credits are available for a number of products at the highest efficiency levels, which typically cost much more than standard products. If, for whatever reason, you decide not to purchase a product covered by the tax credit, you may still consider purchasing an ENERGY STAR product. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.