2009 Tax Credits Available for High-Performance Home Building

While the housing market has certainly seen better days, one thing is clear: home buyers are being more discriminating than ever and want to get the most bang for their buck. One of the few bright spots in the building industry is high-performance and green building. Buyers want homes that will save them money on utility bills, require less money to maintain and have better indoor air quality.

Thanks to federal and state tax credits, there has never been a better time to build a new home or remodel an existing home to high energy efficiency standards. Knowing these tax breaks allows for more informed budgetary decisions.


Home builders can apply for a $2,000 federal tax credit for each energy-efficient home completed after 2005 and sold in 2009 that reduces its energy consumption for heating and cooling by 50 percent when compared to the 2004 International Energy Conservation Code (IECC). To qualify for the tax credit, building envelope improvements in areas such as insulation, exterior doors and pigmented metal roofs must account for 1/5 of the energy savings in each new home.

Home builders must document the energy savings by using a third-party Residential Energy Services network (RESNET)-accredited inspector to certify and model the home with software approved by the IRS and RESNET. EarthCraft House performs both of these services and can provide a tax credit recommendation report to assist builders in achieving the desired savings.


Home owners can received federal tax credits for improving an existing home’s building envelope, which includes insulation materials, exterior doors, windows, skylights, pigmented metal roofs, asphalt roofs and systems designed to reduce heat loss or gain. The combined total of these credits may not exceed ten percent of the costs or $500, with less than $200 dedicated to windows. Improvements should last a minimum of five years and must meet 2000 IECC criteria. Credits cannot compensate for installation costs.
Home owners can apply for federal tax credits for high-performance heating and cooling systems installed in new or existing homes, as well as federal and Georgia tax credits for clean energy resources. To collect credits for any heating, cooling or water heating equipment, home owners must make purchases during 2009 and meet the performance standards set for each technology. Home owners can collect credits totaling the entirety of any expenditure, without exceeding the following caps:

  • Electric Heat Pump Water heaters – $300
  • Electric Heat Pumps – $300
  • Geothermal Heat Pumps – $2,000
  • Central Air Conditioners – $300
  • Natural Gas, Propane or Oil Water heaters – $300
  • Natural Gas, Propane or Oil Furnace or Hot Water Boilers – $150
  • Advanced Main Air Circulating Fans – $50
  • Biomass Stoves – $300

Although clean energy resources vary by system, federal tax credits can cover up to 30 percent of installed costs, and Georgia tax credits can return up to 35 percent of costs. Both federal and state tax credits are subject to caps.

To claim state tax credits, a clean energy system must be placed in service between 2009 and 2012 and be operational or able to function as intended prior to proceeding with both the pre-application processes. Remember to keep clear and accurate records (including receipts, modeling reports and work details) to properly file for tax credits.

For more information about EarthCraft House, visit http://www.earthcrafthouse.com/.

Source: Atlanta Building News, 03/09
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Stimulus Package and New Home Buyer Credit

There are several provisions in the stimulus package that will be beneficial for home buyers and will help stimulate demand for housing. Chief among these is an $8,000 home buyer tax credit for new home buyers. For qualified home purchases in 2009, the legislation:

  • Stipulates that the $8,000 tax credit does not have to be repaid, unlike the tax credit passed last summer;
  • Keeps the tax credit refundable, or claimable regardless of tax liability;
  • Extends the sunset date from July 1, 2009 until Dec. 1, 2009 so that consumers can utilize it during the critical summer and fall buying months;
  • Allows tax credit home buyers to participate in the mortgage revenue bond program;
  • Permits state housing finance agencies to help buyers at closing by advancing the credit amount as a loan using tax-exempt bond proceeds.

There are several other important components in the legislation that will help small businesses and bolster the housing market. H.R. 1, the American Recovery and Reinvestment Act of 2009, will:

  • Help home borrowers in high-cost markets by extending the 2008 FHA, Fannie Mae and Freddie Mac loan limits of $729,750 through the end of this year;
  • Temporarily allow exchange of Low-Income Housing Tax Credit allocating authority for tax-exempt grants and appropriates $2 billion in HOME funding for affordable housing projects;
  • Provide up to a 10-year deferral of tax due to business debt restructuring;
  • Expand the net operating loss carry back period from two years to five years for small businesses (businesses with average gross receipts of no more than $15 million over the prior 3 years) for losses arising in tax year 2008;
  • Extend the 25C existing home remodeler credit through the end of 2010, increase the credit rate from 10 percent to 30 percent, raise the lifetime cap from $500 to $1,500, and expand the set of qualifying property;
  • Provide an Alternative Minimum Tax patch for tax year 2009;
  • Increase bonus depreciation and Section 179 small business expensing for business investment in 2009;
  • Increase New Markets Tax Credit allocating authority for 2008 and 2009;
  • Delay for one year the start of the 3 percent government contractor withholding requirement (from 2011 to 2012).

(Information provided courtesy of National Association of Home Builders)

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