In the past couple of years a lot of people have been enticed into purchasing new windows, doors or other energy efficient home improvements because of the $1500 in tax credits that are available on qualified energy efficient home improvements. I think this last week of 2010 may see a flurry of activity as thousands of people rush to home improvement stores and contractors to get improvements done before the end of the year, and the expiration of the $1500 tax credit. Why you ask? Because the 2011 home improvement tax credit has been reduced in the amount, in addition to what qualifies. From the latimes.com
provisions in the bill could be bad news for homeowners interested in remodeling projects to conserve energy next year. The legislation slashed the popular tax credits for energy-efficient remodeling from 30% of an improvement’s cost ($1,500 maximum per taxpayer) to just a 10% credit with a $500 maximum for expenditures on insulation materials, exterior windows and storm doors, skylights, and metal and asphalt roofs that resist heat gain.
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Energy Efficient Home Improvement Tax Credit For 2011
The home improvement tax credit we've had for the past 2 years allowed homeowners to claim up to 30% of cost of the home improvement, up to $1,500. The amount of that credit is substantial enough that a lot of people were deciding to finally upgrade old windows or doors – $1500 was just too much to pass up.
That tax credit is expiring on December 31st, 2010 (so act this week if you want in!). The tax cut package passed last week passed a new version of the tax credit for 2011, but the amounts have been reduced. Here are the details.
- Home improvement tax credit: 10% of cost of the home improvement, up to a maximum of $500.
- Expiration: December 31, 2011
- Eligibility: Must be on an existing home & your principal residence. New construction and rentals don’t qualify.
- Reduced max credits: Some items have reduced maximum tax credits now as well. Details below.
So you can receive at most a home improvement tax credit of $500. If you've already received credits totaling $500 or more from 2005-2010, you aren't able to claim the credit in 2011.
What Products Are Eligible For The 2011 Home Improvement Tax Credit?
Most of the same products that were eligible for the 2010 home improvement tax credit are eligible for the 2011 version. The amounts on most have just been reduced and/or capped. Some of the eligible products include:
- Energy efficient doors and windows. Installation costs are not eligible for the credit. Other restrictions apply. EnergyStar windows have a max of only $200 eligible for the credit
- Water Heaters. Credit includes installation costs; some restrictions for energy efficiency apply. $300 max credit.
- Insulation, whether spray foam, fiberglass, or blow-in cellulose, they’re all covered so long as they meet IECC requirements. Installation cost is NOT covered.
- HVAC components, including advanced air handlers, air force heat pumps, central A/C units, boilers, propane, and gas furnaces. Tax credits include installation costs. $300 limit, and furnaces must now be 95% efficient.
- Biomass Stoves. $300 credit limit.
- Metal and asphalt roofs. Credit doesn’t include installation costs.
According to the government site, some of the tax credits allow you to claim installation costs, while other credits do not. To find out if your product is included, and whether you can include installation costs, check the government site here.
Applying For The 2011 Tax Credit?
To claim the energy efficient products tax credit, you’ll need to claim the credit on your 2011 taxes in 2012. There will be a form from the IRS to send in with your return. (I’ll update with a link once it becomes available). The product has to be placed in service in 2011.
2011 Federal Income Tax Brackets for your reference.
Willl People Still Take Advantage Of The Credit?
The tax credits have been greatly reduced for many products. For example, if you replaced your windows last year, you may have been able to claim the full $1500 credit. This year, you'd be maxed out at $200. That's quite a drop.
Will that mean that less people go out to buy these energy efficient home products? Most likely. To me that really reduced the effectiveness and the reason for the credit. Why even have it if it doesn't have a stimulus effect?
A lot of building industry folks aren’t happy about the reduction in the credit either.
The net effect of all this, say home building and remodeling experts, will be to severely diminish consumers’ interest in energy-efficient home improvements. Donna Shirey, chairwoman of the Remodelers Council of the National Assn. of Home Builders and president of a contracting firm in the Seattle area, said the gutting of energy-efficiency credits “is a big step backward. It’s bad for the environment, bad for consumers and, of course, bad for jobs in our industry. We’re heading the wrong way here, sending absolutely the wrong message.”
What are your thoughts about the reduction in the amount of the credit? Do you think it will have a negative effect on home remodelers, contractors and other building trades? Tell us your thoughts in the comments.
This is a great idea — these incentives really help build the underlining value of the home too, which helps for resale value.
Credits matter, however the amount of the savings matters equally as well. In my case my utilities are relatively low, the return on investment would take too many years to be worthwhile. I am taking advantage of the rebates for appliances though.
Great post! Most people don’t know that these incentives are available. I own a solar panel installation business and we always tell our customers efficiency first.
This is a great post. As a solar installer, we always tell our customers efficiency first. Most people don’t know that their are tax credits available so they can make smarter energy decisions.
I had a contractor measure for replacement windows after he quoted what I feel is a very fair price. He verified that the higher quality at a (slightly higher price) exceeds the requirements for the energy tax credit and he ordered the windows. The windows did not ship before he left for vacation the day after Christmas. He told me he tried to contact his supplier but the phones were continually busy. I have already paid a deposit on the windows and will have them installed. I guess my question is if the deadline is absolute, or is there a provision for poor weather and/or manufacturers delays.
I think the windows have to be installed prior to 12/31/2010 to get the higher tax credit. The wording on the government site is:
You can check out the government site for more details: energystar site
The deadline is absolute.
I think it is funny that people are mad that they reduced the tax credit limit down. I think they should be grateful that they even extended it with a kick back. They could have just said “OK all done, hanks for playing” those of you who took advantage of it when it was high, Congrats to you. Those who are complaining at least your getting something instead of nothing. Honestly, quit looking for hand outs. you should have taken advantage of it when it was available instead of being lazy and putting it off. It’s your own fault. No reason to cry now.
In response to Erick,
Quite fortunate you are, didn’t lose your job, had plenty to spend, yadayadayada, I work two jobs now, my house is cold, I have saved enough finally in January 2011 to invest in the home at little after bills groceries and health insurance. Glad you got yours. My family is pinching pennies right now. Sometimes it takes longer than a year to save the money. Again, the rich get more and the weak ones pay. Lazy isn’t part of the equation. Your teeney little brain shows your teeey little heart. Shame on you.
Nice response. I’m at three jobs to make up full time employment and I am just now able to consider replacing our windows this year (2011). Less incentive now.
That’s too bad that they are reducing the tax credit for green home improvements! Doesn’t make much sense if you ask me! It is sort of the same as how they are taken away the tax credits for buying green cars, such as Prius’ in recent years.
One size doesn’t fit all. I’m typing this from my warm office on a 30 degree day. Thankfully my employer has not installed “engergy efficient” windows. In the winter the sun generates enough heat in my office that I sometimes close the blinds to cool it off! This is exactly what the “energy efficient” windows now block. Aside from the ugly tinted look of the glass, these new windows prevent rays that heat up a room from passing through the glass. I’m sure this is glorious if you live in Las Vegas, or other desert regions with little plant growth and not much of a winter, but in regions with cold winters and leaf covered trees in the summer this is pure stupidity.
Energy efficient windows also work to keep heat in. You need the right windows for the right place. If you have deciduous trees planted in the right place and windows that let in heat, you have a good situation. One size doesn’t fit all when it comes to energy efficiency. That doesn’t make the idea “pure stupidity,” though.
I think it’s ridiculous to reduce the amount of tax credit from $1500 to $500 and put all of those added limitations. The point is to get people earning and spending again. Not to mention the fact that it also discourages people from investing in energy saving products because the alternate options have lower upfront costs. It’s frustrating to see that so many credits are being limited from one year to the next and homeowner’s are not really being given enough time to take advantage of those credits.
I currently live in a old farm house and have been gutting and refinishing the house room by room. The tax credit was a great incentive to do this and allowed me to make such investments into our home. Taking away these tax credits has put a stop to my plan and I will have to wait to be able to make more investmetns into our home. I was planning on purchasing 12 windows in 2011, but I am now putting a halt to that. It would be nice to make our home more energy efficient, but taking the tax incentive away will put a halt to all my future purchases.
Where is the house on the website located?
I have no clue. It was taken from a stock photo website and wasn’t labeled.. I’d like to know too!
What a bad time to reduce the credit. The economy is still struggling. People need the money and the building industry needs the work.
2009-2010 opened a window of opportunity for widow replacement, the 2011 windows tax rebate is the thin shadow left. Still, even $200 is more than nothing for anyone who anyway needs and wants to replace the windows to newer energy efficient windows, eventually the investment is returned.
My advice – don’t miss the window of opportunity to get 30% credit with no limit on solar power systems and solar hot water heaters. The tax provisions are good through tax year 2016
I would like to install new insulated garage doors.Two of them.I was wondering if there is any tax credits for them? Please email an answer. Thank you
I would like to have ductless airconditioning installed. Is there any
tax credits for that?
“I will not raise taxes on anyone making less than $200k a year.”
I guess that reducing tax credits was in the fine prints. What a crock of-
I keep rereading and if “doors” are covered, wouldnt that include insulated garage doors as well for a credit in 2011. please respond. thank you
tax credits cut by almost 90% wow, that is something, you know I live in a state and I cannot find any incentives for savings for appliances, or for replacement items incentives in this state like the garage door or the windows . Also, what is someone supposed to do , when the rates keep going up on the power that is being used………and the incentives keep going down, does this mean that the power sources from the power grid will be cut off, perhaps we have to just burn all the trees down to stay warm and open all the windows in the summer to stay a little cool. WOW GOOD LUCK WITH ANY GOING GREEN, I really think that the people who can afford whatever really do not give a care as along as they have what they need, who cares about the little person. As for the comment by Corrina, I will not raise taxes on anyone making less than $200k a year,,, well you know that was the idea or plan but who thought …………..that the people who make say a MERE $500k and more would get right in there and block anything and everything that even remotely looked like a fair shake, you know that includes the ones that get free healthcare for the rest of their lives along with many other incentives. You see I am unemployed x nearly 2 years, therefore when I was working I was lucky to make 45K with a house note car note medical bills etc,So when someone says that it was a crock of bull, and read the fine print, you are right, BUT at least IT WAS THE EFFORT TO GET PEOPLE TO REALIZE that they could help with something even if it meant a little bump in the road for them.
Also, as far as ERIC comments, nobody is being lazy when they work two and three jobs to support their family.
I have worked all my life from the age of 17 with two jobs and I am now 591/2 without a job, so you tell me who is lazy and should have taken advantage of the incentives, Hell who knew you could even get incentives or help unless you dug and dug as if you were in a coal mine, so do not tell anybody that they should have done it while the going was good. Perhaps if you were wearing /walking in the other persons shoes, you would definitively( that means by definition) have a much different perspective on the issues at hand called LIFE………………..