Solar/wind energy on the cheap?

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Postby glass3/4full » Tue Apr 07, 2009 3:58 pm

brad wrote:Here's a really handy list of all the stimulus-related tax incentives for renewable energy and energy efficiency. ... ax_credits

Note that for solar and geothermal installations on new or existing homes, you get a 30% tax credit with no upper limit (most of the other tax credits are capped at a certain dollar amount). This is a good deal!

I don't believe that's correct ... although the page itself doesn't list an upper limit for solar/geothermal, it links to IRS Form 5695, which specifies limits for the tax credits:
  • $2000 for solar electric property costs
  • $2000 for solar water heating costs
  • no limit for fuel cell property costs
  • $4000 for small wind property energy costs
  • $2000 for geothermal heat pump property costs
As someone who's looking for a house to buy this month, and who's very interested in all kinds of energy efficient upgrades (from PV cells to solar water heaters to new windows etc, figuring out this very fluid maze of state/federal tax credits & deductions is really beginning to annoy me.

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Postby brad » Tue Apr 07, 2009 5:26 pm

They are linking to the 2008 version of the IRS form, which had the $2000 limit. That limit will not be the case for 2009, but the new tax form is not yet available.

Here's what they say for 2008:

The only energy efficiency improvements that are eligible for a tax credit in 2008 are:

geothermal heat pumps (30%, up to $2,000)
solar water heaters (30%, up to $2,000)
solar panels (30%, up to $2,000)
small wind energy systems (30%, up to $4,000)
fuel cells (30%, up to $500 per .5 kW of power capacity)
You need to file IRS Tax Form 5695 with your 2008 taxes to claim this credit.

Tax credits for windows, doors, insulation, HVAC, and non-solar water heaters (that were available in 2006 & 2007) are NOT available for products installed in 2008, but they are again eligible for products installed in 2009 and 2010.

Here's what they say for 2009:

On February 17, 2009, President Obama signed the "Stimulus Bill" (The American Recovery and Reinvestment Act of 2009) that made significant changes to the energy efficiency tax credits. These changes apply to products "placed in service" in 2009. The highlights are:

The tax credits that were previously effective for 2009, have been extended to 2010 as well.
The tax credit has been raised from 10% to 30%.
The tax credits that were for a specific dollar amount (ex $300 for a CAC), have been converted to 30% of the cost.
The maximum credit has been raised from $500 to $1,500 total for the two year period (2009-2010). However, some improvements such as geothermal heat pumps, solar water heaters, and solar panels are not subject to the $1,500 maximum.
The $200 cap on windows has been removed, but the requirements for windows has been increased significantly. Not all ENERGY STAR qualified windows will qualify.

And a bit more detail for 2009, which includes the notice about the tax form being changed later this year:

Home Improvements
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

    for record keeping, save your receipts and the Manufacturer Certification Statement
    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

If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.

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Postby Martacus » Fri May 22, 2009 2:26 pm

Thanks for posting the guidelines. I'm thinking that maybe for this year it would be best to simply replace the windows and the front door, and add insulation. I see no point in trying to do as much as possible all at once, as we only paid about $1000 in taxes last year and that's not likely to go up soon. Maybe it would also be a good time to file a new W-4 with my employer to and eliminate the payroll tax. Why tie up for a year $1000 I won't owe the government when it can be earning interest?

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