Energy Tax Credit Guide

Get An Energy Tax Credit for Your Replacement Window Project

New replacement window energy tax credits are available! If you are thinking about replacement windows for your house, the government wants to help you out. As a part of the economic stimulus package passed to re-invigorate the economy, the government has renewed the replacement window energy tax credits originally available in 2005. In addition, the government has increased the credit that is available making it a great time to get replacement windows.

Before you start counting the money you will save you should understand the energy tax credit and its guidelines or your replacement window project may not qualify.

Tax Credit Details

The American Recovery and Reinvestment Act of 2009 passed by President Obama in February includes provisions for tax credits for various energy efficient upgrades to your house. The window and door provision is especially enticing because of the potential savings the energy tax credit provides.

Homeowners can claim a tax credit if they upgrade their homes (meaning their existing primary residence) with energy efficient building envelope components, including exterior windows, doors and skylights. Thirty percent of the purchase price (not including installation costs)up to $1500 of qualified windows installed after February 19th 2009 can be deducted from the homeowner's income tax. Exterior doors (whether glazed or opaque) also qualify for a 30% tax credit up to $1500.

This is a great opportunity because you can essentially get a $5000 window package for $3500 if you max out the amount of the deduction. Considering the average cost of a vinyl replacement window that meets the tax credit requirements costs between $300-$400 you can get approximately twelve windows for the price of eight. The energy tax credit may be just the opportunity you need to get your entire house of windows replaced.

Find out more about all the costs associated with installing replacement windows

Even with this thirty percent tax credit, retrofitting a home with energy efficient windows and doors may still be a costly affair. But considering the rising costs for heating and cooling and the advances in window technology that allow lowering these costs, it does not take long for a retrofit to pay itself off. Replacing old windows and doors with a minimum of ENERGY STAR windows and doors can save home-owners hundreds of dollars in heating and cooling costs each year.

The replacement window tax credit offers you the chance to save money even before the energy-cost-savings kick in. And, of course, more efficient windows and doors also substantially enhance comfort, reduce condensation, and help to protect the environment and conserve limited resources.

Be Clear on the Window and Door Performance Requirements

There is one very important requirement included in the tax credit that you should understand before you start shopping for replacement windows. The government is giving this tax credit, but you must purchase high performance replacement windows in order to qualify. NOT ALL ENERGY STAR RATED WINDOWS WILL QUALIFY FOR THE TAX CREDIT SO IT IS IMPORTANT THAT YOU ASK FOR SPECIFICS WHEN SELECTING REPLACEMENT WINDOWS FOR YOUR PROJECT. If you buy a replacement window or door that does not meet the performance requirements, you will not qualify for the energy tax credit and you will lose out on the savings it provides.

The important factor: YOU MUST make sure the window meets is a U-Value of less than .30 and a Solar Heat Gain Coefficient of less than .30 to receive the energy tax credit.

Learn more about U-Value and Solar Heat Gain Coefficient ratings

Be aware that just because a window is Energy Star certified does not mean that it will meet the performance requirements in the energy tax credit. Energy Star windows and doors are a n energy efficient option, but they require less stringent energy performance requirements than a .30 U-value and .30 SHGC that the energy tax credit is requiring. Many window manufacturers today do not offer the required performance measures in their standard window glass. You might have to pay for upgraded glazing options or higher end product lines to get the energy tax credit.

Some replacement window manufacturers don't even have glazing options to meet the requirements, so it is important that you make it clear that you want a product that will meet the requirements. When shopping, ask the window company to show you the performance numbers of the window unit to insure you are getting the right window.

How to Read the Performance Measures

When you are shopping for replacement windows that meet the tax credit requirements, be sure you look at the total unit performance numbers to make sure the window qualifies. If a window company shows you the center glass measurement, you should be concerned.

Why? Because the performance ratings at the center of glass will differ from the total unit numbers. The center of glass will give good numbers, but when combined with the rest of the window unit, the overall performance numbers decrease. In order for the windows to qualify they will need high performance glass and a quality frame material to get the performance requirements.

Understand the Benefits of the Tax Credit

The benefits of receiving the tax credit for these window requirements extends well beyond just the potential $1500 savings. You may have to pay more for a more energy efficient window that meets the requirements of the energy tax credit, but you will get the return quicker in increased energy savings. In addition, a window replacement project typically returns 80-85% of its value in the house when it sells. Overall, a replacement window project with energy efficient windows that meet the energy tax credit guidelines is a project worth investing in this year.

Overall information on the tax credit

This document is not intended to constitute legal or tax advice. More comprehensive information can be obtained from IRS Notice 2006-26, which is available on the IRS website. Individuals should consult their own independent tax advisers.The majority of this information was obtained from published material provided by The Energy Star website.

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