Residential Energy Credit Back for a Short Visit

The nonbusiness energy property credit available to individual homeowners is modified and increased in the following ways:

• The 10% credit for building envelope components is increased to 30%;
• All energy property that was previously eligible for the $50, $100, and $150 credits is instead eligible for a 30% credit;
• The $500 lifetime cap ($200 for windows) is eliminated and replaced with an aggregate $1,500 cap for 2009 and 2010; and
• The credit is extended for one year, through December 31, 2010. Effective for tax years beginning after December 31, 2008. The credit won't be available for property placed in service after December 31, 2010.

This is a lot of technical information that most of us do not understand. However, the good news is that the manufacturers are responsible for publishing material on their products relating to the energy credit. So you should be able to talk to the store or sales person and find out what qualifies for the credit.

Click here for a video provided by the I.R.S.

Various changes have been made to the standards that property must meet to qualify for the nonbusiness energy property credit. These changes will take effect for property placed in service after 2009 (meaning 2009 stays the same with no changes in standards), 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, skylights, and doors – must have a U factor equal to or below 0.30 and a solar heat gain coefficient (SHGC) of 0.30. Electric heat pumps must meet the following 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, and
• 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 the following standards:
• A SEER greater than or equal to 16 and EER greater than or equal to 13 for split systems, and
• A SEER greater than or equal to 14 and EER greater than or equal to 12 for packaged systems.
Natural gas, propane, 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 unit that thetaxpayer uses as a residence, or to heat water for use in the residence, and that has a thermal efficiency rating of at least 75%. Furnaces and boilers – there are six separate categories:
1. A “qualified natural gas furnace” will mean any natural gas furnace that achieves an annual fuel utilization efficiency rate of not less than 95.
2. A “qualified propane furnace” will mean any propane furnace that achieves an annual fuel utilization efficiency rate of not less than 95.
3. A “qualified oil furnace” will mean any oil furnace that achieves an annual fuel utilization efficiency rate of not less than 90.
4. A “qualified natural gas hot water boiler” will mean any natural gas hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.
5. A “qualified propane hot water boiler” will mean any propane hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.
6. A “qualified oil hot water boiler” will mean any oil hot water boiler that achieves an annual fuel utilization efficiency rate of not less than 90.

Effective for property placed in service after February 17, 2009, except that the change regarding biomass fuel stoves takes effect for tax years beginning after December 31, 2008.