For those of you that are considering improvements you may want to hold off until January 1. You may be able to get a 10% up to $500 starting 1/1/06.
This information is excerpted from
Consumer incentives
Home Shell (Existing Homes): Insulation, Windows, Air and Duct Sealing What is the tax credit for existing homes? Existing homes are eligible for a series of efficiency measures. For some measures, such as insulation, a taxpayer can take a credit of up to 10% of the cost. There is a $500 cap on the credit per home, including the amount received for heating and cooling equipment, as described in the next section. Lower caps are set on credits for some individual measures.
These credits are available for buildings or systems placed in service from January 1, 2006, through December 31, 2007. The $500 cap applies to each home over this two year period, so if you take a $350 credit the first year, the maximum credit in the second year is $150.
What is eligible for the federal tax credits? Eligible measures are:
Added insulation to walls, ceilings, or other part of the building envelope. Replacement windows and skylights: credit capped at $200. External doors. Pigmented metal roofs. Sealing heating and cooling ducts, and air sealing of the exterior walls and ceilings are also probably eligible, although the IRS will need to clarify how the tax incentives apply to these measures.
Efficiency levels that qualify for the incentive are:
Added insulation and replacement doors: rules set by IRS based on IECC model energy code. We will post information on these rules as soon as they are issued. Replacement windows: rules set by IRS based on IECC model energy code. Energy Star windows will almost always qualify. Metal roofs: pigmented coatings must meet Energy Star requirements. Manufacturers and retailers should be able to help you tell whether a specific product qualifies.
What do I need to do to qualify for the incentives? Details will be spelled out in the IRS rules and forms. We will post a link as soon as this information is published. At a minimum taxpayers will need information on when the measures were placed in service and may need to demonstrate, in ways to be specified in the IRS rules, that the measures meet the qualification criteria.
Where can I find out more about qualifying products? =B7 Added insulation:
=B7 Replacement windows:
=B7 Duct sealing:
=B7 Air infiltration reduction:
Home Heating & Cooling Equipment
What is the tax credit? Purchasers of highly efficient heating, cooling, and water heating equipment can take tax credits of up to $300 for purchasing qualifying equipment, as detailed below. These credits are available for systems placed in service from January 1, 2006, through December 31, 2007. There is a $500 cap on the credit per home, including the amount received for insulation, windows, air and duct sealing as described in the previous section.
What types of equipment qualify and for how much? High-efficiency gas, oil, and propane furnaces and boilers: $150 High-efficiency central air conditioning units, including air-source and ground-source heat pumps: $300 High-efficiency fans for heating and cooling systems: $50 High-efficiency water heaters, including heat pump water heaters: $300 Where must the equipment be used? Exact rules will be developed by the IRS. Our understanding is that equipment is eligible if installed in a new home or an existing home used as the taxpayer's principal residence. If installed in a new home, the IRS likely will not allow the taxpayer to "double-dip" with the new homes credit; however, if the builder qualifies for the new home credit without the use of the efficient furnace, air conditioner, or water heater, the home buyer likely may take the additional credit.
What are the efficiency requirements to qualify for the credits? Manufacturers and retailers should be able to help you tell whether a specific product qualifies.
The qualification specifications are:
Furnaces and boilers: Annual Fuel Use Efficiency (AFUE) 95 or higher
Central air conditioning units:
Central air conditioning units must meet the highest tier standards set by the Consortium for Energy Efficiency (CEE). These will be set in the fall of 2005 and will likely require a Seasonal Energy Efficiency Ratio (SEER) of 15 and an Energy Efficiency Ratio (EER) or 12.5 or 13. SEER measures performance throughout the cooling season, EER measures performance on a very hot day. For information on the CEE specification see
In addition, ground-source heat pumps must include a desuperheater (which preheats water for a water heater) or an integrated water heating system.
Fans for heating and cooling systems: fan uses no more than 2% of total heating system energy use, as defined by DOE test procedure. For more information, see:
Water heaters: Gas or propane water heaters-Energy Factor of at least 0.8. The only models that meet this standard currently are tankless water heaters and some systems that combine both space and water heating. Heat pump water heaters-Energy Factor of at least 2.0 What do I need to do to qualify for the incentives? Details will be spelled out in the IRS rules and forms. We will post a link as soon as this information is published. At a minimum taxpayers will need information on when the equipment was placed in service and information on the efficiency of the equipment in order to demonstrate that the equipment meets the qualification criteria.
Where can I find out more about qualifying products? Furnaces and boilers: Information on qualifying equipment can be found at: