American Recovery and Reinvestment Act of 2009
The home construction and remodeling business is in the worst economic times it as ever been in. Builders, subcontractors, suppliers and workers have or are facing bankruptcy. Layoffs in the building industry are at all time high and not much recovery in sight. Businesses are doing about anything they can to survive. Some very creative advertising is showing up everyday, encouraging people to build or remodel. This desperate advertising is being centered on the new American Recovery and Reinvestment Act of 2009.
On February 17, 2009 President Obama signed the new American Recovery and Reinvestment Act of 2009 or referring to new energy tax credits. Many have jumped at this to entice people to upgrade to new energy efficient products and earn tax credits back. This plan does provide home owners with some good incentives to upgrade.
President Bush had this energy tax credit in place, which was to end in 2007, but was extended by 2008. The new 2009 plan has many great improvements. Going from a 15% of material rebate in 2007 to a 30% rebate on material in 2009. The new plan increases the rebate from a $500 cap to a $1500 cap. But this is where the home owner needs to read the fine print.
Some of these desperate businesses are advertising that you may be able to get new energy efficient products installed and not have to pay a dime. Now is some situations this may be true but not with all. Installation is not covered with many of the products.
Installation costs ARE COVERED for:
- HVAC (Heating, Ventilation and Air Conditioning) systems
- Biomass Stoves
- Water Heaters (including solar)
- Solar Panels
- Geothermal Heat Pumps
- Wind Energy Systems
- Fuel Cells
Installation costs are NOT covered by the tax credit for:
Now this is just for existing homes upgrading to energy efficient products that pass the Energy Star rating. This is not for new home construction. If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters. Builders are eligible for a rebate on new homes that are 50% more energy efficient than the 2004 IECC.
This tax credit is 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 windmills which are not unprotected to this cap, and are in effect by 2016,
So as you hear these promotions to upgrade your home or build a new home, check on Energy Star’s website to make sure you will get the credit that is being explained to you. Also remember that this is a rebate on your tax return, so you will be waiting until the following year to get it back. Yes these rebates are real and are good to look into, just don’t get sucked into the desperation sales that are happen right now.