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Tax Incentives

Ugh, tax time! While most (if not all) of us dread doing our taxes each year, I suspect we can all agree that finding ways to save Tax Incentivesmoney through deductions is great! So, as a follow up to last year’s BOWA Home Advisor on available tax credits, grants and rebates for green upgrades and other home improvements, we thought it would be important to update you on several of the programs that are available in 2010. While some of them remain unchanged from 2009, there are several additions that could mean a big return from Uncle Sam. Of course, we recommend consulting your tax professional to see if you qualify.

FEDERAL

  • A federal tax credit for updates to your heating, ventilation, AC, insulation, roof, non-solar water heater, windows, and doors is available for upgrades made to your existing principal residence. This tax credit allows for a refund of up to 30% of the cost of the upgrade (up to $1,500) – but pay attention to the fine print, as installation costs for some of these items aren’t included in the refundable amount.
  • A federal tax credit for residential energy properties applies to solar electric systems, solar water heating systems, small wind energy systems and geothermal heat pumps. A taxpayer may claim a credit of 30% of qualified expenditures, including installation, for a system that serves a dwelling unit located in the U.S. used as a residence by the taxpayer (does not need to be the primary residence). If the federal tax credit exceeds tax liability, the excess amount may be carried forward to the succeeding taxable year. The 2009 stimulus package removed the caps and specific dollar amounts that were previously imposed on these credits.
  • A federal tax credit for 30% of the cost (up to $500 per .5kW of power) of the purchase and installation of residential fuel cell and microturbine systems is available until 2016. These systems must be installed in your primary residence, and both new construction and upgrades to existing homes qualify.

MARYLAND

  • The Maryland Solar Energy Grant Program and the Maryland Geothermal Energy Grant Program give grant money to individuals to cover a portion of the costs of acquiring and installing photovoltaic and solar water heating equipment. The grant amounts are: — Solar Water Heating: 30% of installed system cost up to $2,000. — Solar Photovoltaic: for systems under 20 kilowatts, and vary up to $10,000. — Residential Geothermal: $500 per ton of cooling capacity, up to $3,000.
  • In 2007, Maryland passed a bio-heating oil tax credit that provides for a $0.03/gallon tax credit (up to $500) for individuals that purchase bio-heating oil for space and water heating. To be considered bio-heating oil, it must contain at least 5% biodiesel. This credit ends in 2012.
  • Montgomery County residents can receive property tax exemptions of 50% of the total system cost up to $5,000 for heating and electricity generating systems and $1,500 for hot water supply systems. While the amount of the tax credit may not exceed the taxes imposed on the property during a fiscal year, excess credits accrued may be carried forward for up to two additional years.
  • The State of Maryland will implement a mail-in rebate program that will help residents replace older, inefficient appliances with new ENERGY STAR® qualified and ultra-efficient appliances. Eligible products include refrigerators, clothes washers and heat pump water heaters. The program is scheduled to begin April 22, 2010.

VIRGINIA

  • Under the Virginia Energy Efficiency Rebate Program, residents can qualify for rebates on home energy audits, qualified improvements, and installed equipment for any existing building. Among the eligible items are programmable thermostats; heating and cooling equipment; insulation and air sealing, and replacement windows, doors and skylights. Rebates differ depending upon the item purchased/installed.
  • Virginia allows a four-day sales tax exemption on certain classes of Energy Star and WaterSense products of $2,500 or less per product, purchased for non-commercial home or personal use. This 100% exemption from the state sales and use tax applies to sales occurring during the special four-day period each October. For certain energy efficient products purchased other times of the year, individuals may claim a deduction of 20% of sales tax, up to $500.
  • The State of Virginia will implement a mail-in rebate program to help residents replace old, inefficient appliances with new, efficient ENERGY STAR® qualified appliances. The program is scheduled to begin on April 28, 2010 and if funds are not depleted, will continue in 2011. Eligible products might include refrigerators, clothes washers, gas storage water heaters, gas tankless water heaters, gas furnaces and air source heat pumps.

WASHINGTON, DC

  • In 2009, the District Department of Environment (DDOE) introduced an expansive multi-year renewable energy incentive program. Currently, residents may qualify for incentives on their first 20 kilowatts produced via photovoltaic and wind energy systems, up to $33,000. Additional incentives will be rolled out throughout the year for solar thermal, geothermal, biomass and methane recovery systems.
  • District residents, who live in a single-family home or townhouse that is 4,000 square feet or less, can get a free home energy audit from the DDOE.
  • The District of Columbia will implement a mail-in rebate program to help residents replace older, inefficient appliances with ENERGY STAR® qualified appliances. The program is tentatively scheduled to begin in late May 2010 and will last until funds are depleted. Eligible products include refrigerators, clothes washers, dishwashers, and electric heat pump water heaters.

We hope that you find this information helpful and are able to take advantage of these incentives for any environmentally-conscious upgrades to your home. For a comprehensive state-by-state and Federal breakdown of available credits and incentives, please visit www.dsireusa.org.