Currently there are tax credits available for home improvements that make your house more energy efficient. The upgrades must be placed in service between January 1, 2009 and December 31, 2010. The credits are available only for the taxpayer's principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes do qualify). The maximum that can be claimed for all improvements placed in service in 2009 and 2010 is $1,500, 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. The improvements that are subject to the $1,500 limit are Insulation, Windows and Doors, Roofing, Heating, Ventilation and Air-Conditioning (HVAC), and Water Heaters. Let us look at the tax credits and requirements for each of the aforementioned $1,500 limited improvements.
August is the time of year when many people ask, “What can be done to lower my energy costs? And how can I get the most bang for my buck with the available tax credits?” The easiest way is to reduce the need for air conditioning by insulating and closing gaps in your house. Start by having a Home Energy Audit which consists of two tests. The first is a blower door test that measures the tightness of your house and helps identify the leaks’ location. The HVAC ducts undergo the same testing in the duct blaster test. The home energy audit will determine if caulking and new insulation is needed. The tax credit for new insulation is limited to 30% of the cost (including installation) and the insulation must meet the 2009 International Energy and Conservation Code (IECC). For Beaufort County the 2009 IECC requires R-30 insulation in the ceiling, R-13 in the exterior walls and R-19 in the floor. The Department of Energy’s (D.O.E.) recommendation for Beaufort County is R30 to R60 in the ceiling, R 15 in the exterior walls and R-25 in the floor.
The window and door replacement tax credit is also 30% of the cost. There are two requirements for windows and doors. The U-Factor measures the heat loss a window allows, the lower the number the better (between 0.2 and 1.2). The Solar Heat Gain Coefficient (SHGC) is a number between 0 and 1 that measures the amount of heat transferred through a window, the lower the number the better. The tax credit requires a U-Factor of less than 0.30 and a SHGC of less than 0.30. You will also want to consider Impact Resistance Glass which will protect your openings during a hurricane.
The roof replacement tax credit is limited to 30% of the cost of material only. The roofs must be qualified metal or reflective asphalt shingles as listed by Energy Star. If your house is shaded or has a super insulated roof the benefits of reflective roofing will not have as large of impact.
An air to air heat pump is the most common HVAC system found in the Lowcountry. The tax credit is also limited to 30% of the cost. The deciding factors are the Seasonal Energy Efficiency Ratio (SEER) which measures the cooling mode of the heat pump. The SEER Rating is a number between 13 and 22, the higher the number the better. The Heating Seasonal Performance Factor (HSPF) measures the efficiency of the heating mode of the unit. The HSPF is between 6.8 and 9.5, the higher the number the more efficient the unit. The final measurement is the Energy Efficiency Ratio (EER) which measures the peak cooling capacity. The EER is between 11 and 14 and the high number is the desired rating. For split systems the tax credit requirements are SEER Rating of 15, EER of 12.5 and HSPF of 8.5. The package unit requirements are SEER Rating of 14, EER of 12 and HSPF of 8.
Currently only gas and propane tankless Energy Star rated Water Heaters meet the requirements for the tax credit, which is also 30% of the cost.
For additional information the following sites may be helpful.