| What
is the energy efficiency tax credit worth?*
Homeowners are eligible for a tax credit of up to $500 for 10%
of the costs of qualified energy efficiency improvements made
to their homes. So, if a homeowner spends $800 to add proper levels
of insulation to their home, they would qualify for a Federal
tax credit of $80.
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What energy efficiency improvements are eligible for
the tax credit?*
The tax credit for existing homes requires that the building
envelope component being renovated must meet the energy efficiency
minimum standards outlined in the 2004 International Energy Conservation
Code. Insulation is a key component of the home or building envelope.
Other qualified envelope components include windows (only for
a maximum credit of $200), doors, skylights and air duct sealing.)
EPA’s ENERGY STAR Home Sealing Program offers consumers
advice on how to improve their building envelope. Adding insulation
is one of the fastest and most effective ways to save energy in
your home.
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What areas of my home are considered the house envelope?
The envelope is defined as the area along the perimeter of the
home that separates the living space from the outside. This includes
attics/ceilings, walls, basements and crawlspaces.
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Do the improvements have to meet any specific requirements?*
Improvements to the home or building envelope must meet the 2001
Supplement to the 2000 International Energy Conservation Code
(IECC) or the 2004 Supplement to the 2003 IECC.
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Why does the IRS guidance refer to two different codes?
You should ask the IRS why they chose to do that. Our assumption
is that the IRS recognized the need for flexibility when dealing
with a wide variety of existing housing stock.
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What are the 2001 Supplement to the 2000 International
Energy Conservation Code (IECC) and the
2004 Supplement to the 2003 IECC?
These are the model building energy codes that are used around
the country as a basis for local codes. They represent the minimum
levels of insulation required by codes. These codes are constantly
being updated, and the 2001 and 2004 Supplements to the IECC are
two versions approved for use. States are free to adopt any version
of the code they wish. The current IECC is the 2006 version.
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How much insulation do I need in my home to meet the
levels required for the tax credit?*
The amount of insulation in a home varies depending upon where
you live and which IECC code you are following per the guidelines.
Since these codes are quite complex, NAIMA has developed a simplified
set of recommended levels of insulation to maximize comfort and
energy savings based on recommendations from the Department of
Energy and the levels of insulation required under the 2001 and
2004 Supplements to the International Energy Conservation Code
(IECC). NAIMA’s recommendations are consistent with the
2001 Supplement to the 2000 International Energy Conservation
Code (IECC) and the 2004 Supplement to the 2003 IECC. Click here
for a state by state map showing NAIMA's recommended R-value in
your area.
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How do I know how much insulation I already have?
Look for an R-value printed on the facing of fiber glass and
mineral wool batts. If you have an unfaced batt or any type of
loose fill insulation, use a ruler to measure the amount of insulation
currently installed. If you have six inches or less, you probably
need more. In most homes, adding an insulation layer of R-19 to
R-30 should help achieve the levels recommended for optimal comfort
and savings, and qualify for the Federal tax credit. For
more information on determining your existing levels of insulation,
click here.
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If I am adding more insulation to my home, do
I need to remove what I already have?
No, R-values are cumulative. For example, two layers of R-19
batts will give you a total of R-38. Consider using unfaced R-19,
R-25 or R-30 fiber glass or mineral wool batts and laying them
cross-wise to the existing insulation covering the joists. If
there is no insulation in your attic, use R-38 or R-49 full width,
faced batts, or fiber glass or mineral wool loose fill insulation
to reach the appropriate R-value for your area. Click
here for a state by state map showing NAIMA's recommended R-value
in your area.
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Is there a specific time frame in which I need to make energy
efficiency improvements in order to be eligible for the tax credit?*
The IRS guidelines state that consumers who want to take advantage
of the Federal tax breaks for their homes must install the products
between January 1, 2006 and Dec. 31, 2007.
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Do I still get the tax credit if I hire a professional
contractor to add insulation?*
Yes, however, the IRS guidance states that the tax credit is
based on 10% of the cost of the energy efficiency product, not
the installation. Make sure that the contractor gives you an itemized
receipt that breaks out the cost of the insulation from the labor
charge. The contractor will also need to provide you with information
on the product used and its manufacturer so that you may get a
manufacturer’s certification statement from the manufacturer’s
website. The contractor may also provide you with a copy of the
manufacturer’s certification statement. Click here for links
to the manufacturer’s certification statements from NAIMA
members.
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What paperwork will I need to produce at tax time
in order to be eligible for the tax credit?*
The IRS guidelines state that you will need to retain any retail
or contractor receipts from the purchase of energy efficiency
products made between Jan. 1, 2006 and Dec. 31, 2007. You will
also need a manufacturer’s certification statement, which
you should be able to download from the manufacturer’s website.
Click here for links to the manufacturer’s certification
statements from NAIMA members. Click here for the IRS Instructions
on Existing Homes Tax Credit included in Estimated Tax Form
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Can I only take the credit once between January 1,
2006 and December 31, 2007?*
The IRS guidelines state that you can take the credit in both
years if you made separate qualifying purchases for a total maximum
credit of $500. For instance, if you upgrade your insulation in
2006 and your windows in 2007, you can take the allowed tax credit
in both years not to exceed the maximum allowed credit of $500.
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Do I need to add insulation all over my house to qualify?*
The IRS guidelines state that homeowners must bring the specific
component being improved to the levels required by the 2004 International
Energy Conservation Code. So, if you choose only to add insulation
to your attic, you just have to meet the levels of insulation
required by the 2004 IECC for attics.
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Do I need to do an energy audit or a post-insulation
inspection?*
The IRS guidelines do not require an inspection or audit for
the existing homes tax credit. However, energy audits can be useful
tools to help you assess the best places to add insulation in
your home.
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Do caulk and weather-stripping qualify for the tax
credit?*
These products are not covered by the 2004 International Energy
Conservation Code and therefore do not qualify for the credit.
That said, coupling home sealing techniques, like caulk and weather-stripping
with insulation can help achieve increased energy savings and
better comfort. These are low cost, easy do-it-yourself jobs that
can further increase the value of adding proper levels of insulation.
Visit www.energystar.gov for information on the Energy Star Home
Sealing Program which provides homeowners with detailed information
on home sealing and insulation.
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Do appliances qualify for the tax credit?
Appliances such as heating and cooling equipment also qualify
for tax credits under the Energy Policy Act. For advice on those
tax credits, contact the US Department of Energy or the manufacturers
or trade associations in that industry.
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I’m buying a new home that is energy efficient.
Does that qualify for the tax credit?
A separate tax credit for new homes was also passed in the Energy
Policy Act. However, this credit is for the builder. Discuss this
credit with your builder to see if your new home qualifies.
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Can I only use some kinds of insulation to get the
tax credit?*
All insulations that meet the Federal Trade Commission requirements
for R-value qualify for the tax credit. This includes fiber glass
and mineral wool insulations.
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If I add insulation to interior walls of my home for
sound control, am I still eligible for the tax credit?*
While acoustical insulation adds tremendous comfort to a home,
the tax credit applies only to improvements made to the building
envelope since they affect energy use. The building envelope does
not include internal walls or acoustical insulation.
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*Disclaimer – While Garrity Insulation is
not an expert on tax issues, we believe that if homeowners follow
NAIMA’s R-value recommendations, they should qualify for
the Federal tax credit based on our understanding of the 2001
and 2004 Supplements to the IECC and the IRS guidelines. However,
Garrity Insulation does not state or imply that each and every
insulation installation job will qualify for a tax credit. Garrity
Insulation does not warrant or guarantee a tax benefit will be
awarded for each and every addition of insulation. Eligibility
may vary by jurisdiction. Please carefully consult the Internal
Revenue Service (www.IRS.gov) rules and guidelines on how to qualify
for the energy efficiency tax credit.Garrity Insulation does not
provide or offer professional tax counseling. |
