The American Recovery and Reinvestment Act of 2009 reinstated and amended the non-business energy property tax credit. The credit is for people who spend money on their principal residence for new improvements or certain new equipment that increase the energy efficiency of their home. The credit equals 30% of the amount spent on qualified improvements in 2009 and 2010, but the credit cannot exceed $1,500 over both years.
What type of expenditures qualify? Expenditures for insulation materials, exterior windows, exterior doors, asphalt or metal roofs, natural gas furnaces, propane furnaces, oil furnaces, natural gas hot water boilers, propane hot water boilers, oil hot water boilers, advance main air circulating fans, central air conditioners, electric heat pumps, and stoves that burn biomass fuels qualify IF they meet certain specifications. How do you know if they meet specifications? You can consult the Internal Revenue Code and the 2000 International Energy Conservation Code or you can ask the person selling you the equipment or materials. The manufacturers will have told the distributors whether or not their product qualifies for the credit. But therein lies a problem.
Your salesman can tell you whether the equipment or materials will qualify for the credit based on energy efficiency, but that doesn’t guarantee you can take the full amount of the credit on your tax return. Why? You may not have $1,500 worth of tax liability for the credit to offset. The non-business energy property tax credit is not a “refundable credit”. I.e., you must have a tax liability to benefit.
The bottom line: Many people will make a decision to buy a more energy efficient central air conditioning unit if they believe they will get $1,500 back on their income taxes at the end of the year. For money people, this $1,500 might not materialize. It depends on your particular tax situation. Ask your CPA.
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