What the tax deal means for your home
So what’s in the tax compromise for clean energy? Well, one clean energy proponent says there’s some good things to come — but there could have been more.Kateri Callahan, president of the Alliance to Save Energy, said in a statement that she’s happy some new tax incentives are in the package but adds, “We’re sorely disappointed that Congress did not see fit to make the incentives more generous. That would have increased their use by consumers, to the benefit of our economy, energy security and environment.”
This is just one of the latest in a series of lukewarm endorsements of the tax plan, which probably proves that the compromise was fair but certainly not perfect — no matter how you define perfect.
Here's a list of four of the green energy provisions buried in H.R. 4853, otherwise known as the Middle Class Tax Relief Act of 2010.
1. Extension of the new homes tax credit for homebuilders
This simple rule extends existing tax credits for any new home that's built to use 50 percent or less energy for heating and cooling purposes. Of course, you have to prove this to be eligible, but the credit system remains in place and is more attractive than just a deduction.
2. A return to pre-stimulus incentives for improving existing homes
The federal government has agreed to keep a federal tax credit capped at $500 to any homeowner who makes approved energy-efficiency improvements. But there's a catch. The types of improvements are categorized and capped within the overall $500 cap. For instance, there is a limit on “building envelope” improvements like insulation, better roofs or better windows. You can deduct 10 percent of the cost of all of these improvements, but the credit cap for these dedications is $200, which can be exceeded pretty darned quickly.
3. Efficient heating systems of all kinds can be tax deductions
H.R. 4853 has something for everyone when it comes to upgrades for home heating and water systems. A $150 credit can be obtained for installing pre-approved natural gas and oil furnaces. The same can be said for propane and hot water boilers.
4. Energy-efficient building properties
A $300 credit is available for a category called the “energy efficient building property.” Of course the devil is the details in terms of why systems qualify and all that jazz, but the skinny is that the credit comes for homes that are heated by approved electric heating pumps, natural gas systems, propane systems, oil systems, central air systems and biomass heating and water heating systems. To find what systems fit into this category, I suggest you begin your research with a tax specialist before you charge a $20,000 biomass heating system on your MasterCard.
So, that's the scoop on how the new tax deal can help you make your home more efficient. It’s easy to see that more could have been done, but this how deal played out. As for taking advantage of the extended credits, the form for doing that can be found here, but remember: do your research before you buy.
Besides, nothing says "Merry Christmas" like a new biomass heating system under the tree.