How to take advantage of tax credits and improve your home

| by Gary Parsons
How to take advantage of tax credits and improve your home

With April 15th quickly approaching, the topic of deductions, credits and exemptions take center stage as homeowners prepare their 2013 tax returns with the hope of receiving a tax refund this year.

As one tax year closes, another begins, making it the perfect time to think about what you can do around your existing home or in a new home under construction that may qualify for a credit on next year’s return.

There are simple air sealing and insulation home improvement projects that can immediately improve the comfort of your home, qualify for tax credits and deliver up to 20 percent cost savings on energy (heating and cooling) bills throughout the year. Otherwise known as a win-win-win!

 In fact, now is the perfect time to tackle those projects. As a part of the recently passed American Tax Payer Relief Act of 2012, Congress modified and extended its energy efficiency tax credits for energy efficiency improvements in the building envelope of new homes (Energy-Efficient New Homes Tax Credit for Home Builders) and retrofits to existing homes (Residential Energy Efficiency Tax Credit). Here is the scoop on each of these tax credits:

Energy-Efficient New Homes Tax Credits for Home Builders: New homebuilders are eligible for a $2,000 tax credit for a new energy efficient home that achieves 50 percent energy savings for heating and cooling over the 2006 International Energy Conservation Code (IECC) and supplements. At least one-fifth of the energy savings must come from building envelope improvements like air sealing and insulation. Talk to your homebuilder about how this tax credit could offer additional savings when building your new home.

Residential Energy Efficiency Tax Credit: This credit includes the 25C insulation and air sealing tax incentive for 2012 and 2013. Thanks to the federal legislation retroactively extending previously available tax credits, homeowners may be eligible for a tax credit if they purchase or purchased certain types of insulation and air sealing materials, or make other energy-related improvements to their homes between January 1, 2012 and December 31, 2013. 

The new legislation extends the cumulative cap of a $500* maximum tax credit. For qualified improvements, homeowners may be able to claim 25C tax credits equal to 10 percent of the installed costs (up to $500 maximum*). The extended tax credit is in effect for all qualifying systems and products installed during the 2012 and 2013 calendar yearsincluding the following:

  • Insulation materials and systems designed to reduce a home's heat loss or gain
  • Exterior doors and windows (including skylights) --- no more than $200 in total credits can be claimed for windows in years 2006 - 2013

Improving a home’s energy efficiency may sound intimidating, but there are several inexpensive DIY projects that can quickly address the on average more than one-half mile of gaps and cracks within a home that are major sources of energy loss.

Windows & Doors: These areas in the home can be a major source of air leaks throughout a living space, but the problem is easily addressed by sealing the gap between a window or door frame and its rough opening using GREAT STUFF™ Window & Door.**

HVAC Systems:Your air conditioning system setup might be doing more than just cooling your house. It might be an air-infiltration culprit. Help keep the cold air in and seal around all duct penetrations with GREAT STUFF™ Gaps & Cracks. **

Attic Hatch: While the insulation in your attic may have an acceptable R-value (R means resistance to heat flow. The higher the R-value, the greater the insulating power), the attic hatch door system is often the weakest link in the attic insulation. With a simple DIY project, homeowners can air seal the gap between the attic hatch door frame and the ceiling joists using GREAT STUFF™ Gaps & Cracks to help keep the conditioned air in the living space from escaping through the attic. When combined with a gasket on the attic hatch, this will significantly reduce air leakage.

After completing these easy DIY projects and you begin to see immediate results, you may be interested in professional help to address additional air sealing solutions for added energy savings and increased comfort. Please visit www.dowenergyaudit.com to learn more about how you can get a home energy assessment.

A summary of incentives and other available credits can be found via www.energystar.gov/taxcredit or www.dsireusa.org. Be sure to consult your tax advisor to determine how to apply for potential income tax credits.

After any home sealing project, have a heating and cooling technician check to make sure that your combustion appliances (gas- or oil-fired furnace, water heater and dryer) are venting properly. For additional information on Indoor Air Quality (IAQ) issues related to homes, such as combustion safety, visit EPA’s Indoor Air Quality Web site.

Good luck with your home improvements – and save those receipts!

**Consult label and Material Safety Data Sheet carefully before use.


Topics: Rebates / Tax Credits

Companies: Dow Building Solutions



Gary Parsons
Gary Parsons is the Lead Building Scientist in Dow Building Solutions Research and Development. He is a LEED Accredited Professional, a licensed residential contractor in the state of Michigan, a member of the Society of Plastics Engineers and a member of ASHRAE. wwwView Gary Parsons's profile on LinkedIn

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