Economic Recovery Act Provides Incentives to Make Homes More Energy Efficient
The Economic Recovery Act of 2009 (the “American Recovery and Reinvestment Act of 2009”) offers American homeowners big incentives to make their houses more energy efficient by means of tax credits. Heat exchange – the transfer of warmer or colder air from outside the home to inside the home – happens when there are ways for exterior air to enter the house and for the conditioned air inside the house can escape to the outside. This happens through the “building envelope.” This is essentially, the part of the house that creates or defines a barrier between the outside and the inside.
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The building envelope includes:
- Exterior siding
- Insulation
- Windows
- Doors
- Roof
If you want to remodel or renovate your home to make it more energy efficient, this is the place to start. Logically, after all, no matter how efficient your heating/cooling system, if the building envelope is not properly sealed, you are defeating the purpose.
So how do you renovate to have the most efficient building envelope you can? The first step (unfortunately one for which there is no tax credit) is to seal all cracks in exterior surfaces of your home. Many homeowners can do this project. It simply involves checking the exterior walls of the house for any cracks, holes or other openings through which conditioned air can pass and sealing them with appropriate caulk or other sealants. Fortunately, this is not a terribly expensive undertaking.
Exterior siding is probably not the ideal choice for a remodel unless you need new siding or  exterior materials anyway. If you are renovating and you plan to replace or upgrade your exterior siding, talk with your contractor about the best material for your home. A siding expert can explain the insulating properties of the various available exterior siding materials. Siding does not qualify for tax credits under the provisions of the Economic Recovery Act of 2009.
Insulation needs to meet the specifications of the International Energy Conservation Code that is in effect as of January 2009. In order to qualify, the primary purpose of the material must be insulation. This includes materials commonly referred to as “insulation” and to vapor retardants. It does not refer to siding. If you upgrade your home’s insulation with qualifying materials, you can claim a tax credit for 30% of the cost of the insulation up to a total credit of $1,500 for all improvements. Upgrading insulation will also make your home more comfortable and will reduce your heating/cooling costs for as long as you own your home, making this a win-win-win home improvement choice.
Windows are also a major point of heat exchange in a home. In addition, they admit sunlight (and its warmth) and UV rays. New windows are a good home improvement investment, both in terms of appearance and energy efficiency. No matter what the style or material of your current windows, replacement windows can be found that will probably be more energy efficient (unless they were purchased in the past few years). It is important to keep in mind that all windows (including skylights and roof windows) that carry the EnergyStar label will meet the qualifications for a tax credit. New windows, depending upon size, style and material, will cost between $300 and $700 on average, but could cost as much as $1,000. To qualify, windows must have a “U factor” that is below or equal to 0.30 or a SHGC of below or equal to 0.30. Storm windows must meet IECC requirements when combined with the efficiency of the window over which it is installed. The requirements will vary by climate zone. To claim a credit for storm windows you will need a Manufacturer Certification Statement of the types of exterior windows with which it can be combined to meet requirements.
Doors will also need to be carefully chosen from available styles and materials to be sure the door meets the requirement of a U factor of 0.30 or less and SHGC of 0.30 or less. As is the case with windows, all EnergyStar doors will not meet this requirement. 30% of the cost of new exterior doors can be claimed for a tax credit up to a total of $1,500 for all qualifying energy efficiency upgrades.
If it is time for a new roof, you can again qualify for a tax credit of 30% of the cost of the new roof if the materials used are qualifying asphalt shingles or metal roofs. In addition, the roof must have a two year warranty or be expected to last five years or more.
Whatever you do to improve the building envelope of your house through energy efficiency renovation or remodeling, don’t forget to carefully seal all cracks, holes and seams. These home improvements will bring a very large payback: your home will be more comfortable, you will save on heating and cooling costs for as long as you remain in your home (or the life of the materials), and you will qualify for a nice tax credit.
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