Tax Incentives

In December 2010, 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, 2011. The legislation also includes a provision that extends the tax credit for consumers who purchase qualified energy saving products until the end of 2011, but the cap will be reduced from $1,500 to $500. The cap is on the total amount of credits a homeowner may claim between 2006 and 2011, not just for 2011. If a homeowner has already claimed $500 or more in credit through this allowance, they will be unable to claim new credits for improvements made during 2011. Included are provisions limiting window incentives to $200, oil and gas furnace and boiler incentives to $150-200, and water heater and wood heating system incentives to $300. As part of the legislation, Congress tightened the specifications for oil furnaces and boilers and gas boilers to 95% efficiency, up from 90%.

We will provide more information about the 2011 federal tax credits as details become available.

Significant state and federal tax incentives were available in 2009 and 2010 for energy efficient home improvements and the installation of consumer owned renewable energy projects. To make sure products qualify for the incentives ask for a copy of the manufacturer's certification statement before committing to the purchase.

The North Carolina Department of Revenue has issued a detailed set of guidelines for determining tax credit eligibility.

To obtain a federal tax credit for qualifying purchases made in 2010, you will need to file IRS Form 5695 by April 15, 2011.

The federal tax credit for products at 30% up to $1,500 cannot be carried over to future years. You can't even carry forward tax credit dollars from 2009 to 2010. But you can take part of the $1,500 in 2009, and the rest in 2010 - if they are for separate purchases (example: you spend $3,000 on windows in 2009 and get a $900 tax credit on your 2009 taxes, then spend $2000 on an air conditioner in 2010 and get a $600 tax credit on your 2010 taxes).

The federal tax credit for the following products at 30% with no upper limit can be carried forward to future years:

• Geothermal Heat Pumps
• Solar Panels
• Solar Water Heater
• Small Wind Energy Systems
• Fuel Cells

You can carry forward the credit as long as the credit is still in effect. In this case, the credit for these products is in effect through 2016. The energy efficiency tax credit is technically "non-refundable" so you can't get back more in credits than you paid the government in taxes throughout the year. If you are unable to claim the entire 30% of your purchase for the above named products, you can carry forward the unclaimed portion to future years through 2016.

The federal tax credit for insulation, windows, doors, roofs, HVAC, biomass stoves, and non-solar water heaters cannot be carried over. These credits are for 30% of the cost, up to $1,500 in 2009 and 2010.

Consumer Tax Incentives Brochure