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01/03/2013 Upper Marlboro, MD

Congress Saves Energy-Efficiency Tax Credit for New High-Performance Homes, Efficient Remodeling Upgrades

As part of the recent “Fiscal Cliff” legislation, Congress extended the $2,000 federal tax credit for builders who build energy-efficient homes. The extension is from January 1, 2010 to December 31, 2013, allowing the deduction for projects completed last year and ones that will be planned for the current year.

For the green home remodeling industry, the legislation also extends the tax credit for homeowners to purchase qualified products to improve the energy efficiency of their existing homes, but at a reduced level from the original credit. The credit is 10% of the cost of the building materials (labor excluded) for insulation, exterior windows, and doors that meet Energy Star requirements, and roofs (metal roofs with pigmented coating, or asphalt roofs with cooling granules). So if the cost is $5,000, you get the full $500 credit, except for windows, which have a sub-limit of $200. Also eligible toward the $500 maximum credit are: central air conditioners ($300); heat pumps ($300); furnaces ($150); and even corn-fueled stoves ($300). Congress tightened the specifications for oil furnaces and boilers and gas boilers to 95% efficiency, up from the 90% efficiency in the previous credit.The new bill extends the credit to December 31, 2013.

President Obama signed the legislation by autopen on Wednesday, January 2nd. See Section 401 for the credit for existing homes, and Section 408 for the extension of the energy-efficient tax credit for new homes. To review the complete legislative language, visit the American Taxpayer Act site.

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