With a week left to file, did you remember your energy tax credits?

I finished my takes last week, and all told we are receiving more than $38,000 in tax credits both federal and state from the installation of geothermal system and other ENERGY STAR products in our home in 2009. There were a lot of changes in the tax code this year so if you made home improvements, be sure to give your tax preparer your receipts so you can determine your deductions for 2009.

To find out about rebates in your state, check out the DSIRE website. The ENERGY STAR website also provides great information about Federal rebates.

Rhode Island Tax Credits

Residential Renewable Energy Tax Credit for Solar Water Heat, Solar Space Heat, Photovoltaic, Wind, Geothermal Heat Pumps

o    Amount: 25%  based on maximum system cost of $15,000 for PV, active solar space heating and wind and based on $7,000 maximum system cost for solar hot water and geothermal

Renewable Energy Sales Tax Exemption

o    Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaic, Wind, Geothermal Heat Pumps, Solar Pool Heating

o    100% Exemption

People’s Power & Light – Renewable Energy Certificate Incentive

o    Production incentive for photovoltaic and wind

o    $0.03 per kWh with a 3-year contract

Appliance and Equipment Efficiency Standards

o    Credit amount is based on the product. Proper manufacturer certification will be needed to claim this credit

Federal Tax Credits – visit the ENERGY STAR website for qualifying factors for each credit

Home Improvements

o    Windows & Doors – 10% of cost, up to $200 for all windows, skylights, and storm windows and  10% of cost, up to $500 for exterior and storm doors

o    Roofing –10% of cost, up to $500 for metal and asphalt roofs

o    Insulation — 10% of cost, up to $5000

o    HVAC 

  • $300 for Central AC
  • $300 for Air Source Heat Pumps
  • 30% of the cost up to $2000 for Geothermal Heat Pump
  • $150 for Gas, Oil, Propane Furnace or Hot Water Boiler

o    Water Heaters

  • $300 for gas, oil, propane water heater

o    Biomass Stoves —  $300

Solar Energy Systems

o    30% of the cost up to $2,000 for solar water heating

o    30% of the cost for photovoltaic systems ($2,000 cap no longer applies)

Small Wind Energy Systems

o    30% of the cost, up to $500 per half kW of capacity (not to exceed $4,000)

Fuel Cells

o    30% of the cost, up to $1,500 per half kW of power capacity

 This is the list of tax rebates we applied to our 2009 taxes:

 1. Windows/Doors: $200 for our Pella Windows and $500 for our doors = $700

2. Our composite shingle roof = $500

3. Our spray foam insulation = $500

4. Our Geothermal Heat and AC System = Based on our total cost of $116,754, we have a tax credit of $35,026 federal  and $1750 state credit.

Not too bad I say.

Kimberly Lancaster | follow me on Twitter: newscaster

There’s Money Out There to Upgrade Your Home

As we head into Q4 2009 you might want to look at if you need to get some tax credits on your 2009 tax returns.   ENERGY STAR appliances, spray foam insulation, ENERGY STAR windows, metal roofs, and more, there are opportunites for you to use the government’s money to upgrade your home this year.

What is a tax credit? You don’t receive an income tax credit when you buy the product, like an instant rebate. You claim the credit on your federal income tax form at the end of the year. The credit then increases the tax refund you receive or decreases the amount you have to pay.

Tax credits vs. tax deductions: In general, a tax credit is more valuable than a similar tax deduction. A tax credit reduces the tax you pay, dollar-for-dollar. Tax deductions – such as those for home mortgages and charitable giving – lower your taxable income. If you are in the highest 35-percent tax bracket, the income tax you pay is reduced by 35 percent of the value of a tax deduction. But a tax credit reduces your federal income tax by 100 percent of the amount of the credit.

This list is for any product INSTALLED in 2009 will be eligible for your 2009 return. Our list is for deductions for Rhode Island and Federal taxes. To find out about rebates in your state, check out the DSIRE website. The ENERGY STAR website also provides great information about Federal rebates. Continue after the jump to get a list of state and federal tax credits. 

Rhode Island Tax Credits

Solar Water Heat, Solar Space Heat, Photovoltaic, Wind, Geothermal Heat Pumps :    Amount: 25% of installed cost including labor and materials

Renewable Energy Sales Tax Exemption:  Solar Water Heat, Solar Space Heat, Solar Thermal Electric, Photovoltaic, Wind, Geothermal Heat Pumps, Solar Pool Heating:    100% Exemption

Appliance and Equipment Efficiency Standards:    Credit amount is based on the product. Proper manufacturer certification will be needed to claim this credit

Local Option – Property Tax Exemption for Renewable Energy Systems for Solar Water Heat, Solar Space Heat, Photovoltaic, Wind, Biomass, Small Hydroelectric

Federal Tax Credits – visit the ENERGY STAR website for qualifying factors for each credit

Windows & Doors :  10% of cost, up to $200 for all windows, skylights, and storm windows and  10% of cost, up to $500 for exterior and storm doors

Roofing: 10% of cost, up to $500 for metal and asphalt roofs

Insulation: 10% of cost, up to $5000

HVAC:  $300 for Central AC, $300 for Air Source Heat Pumps, $150 for Gas, Oil, Propane Furnace or Hot Water Boiler

Geothermal System: Geothermal (or ground-source) heat pumps placed in service starting in 2009 are now eligible for a tax credit for 30 percent of the cost, with no maximum. These credits are effective through December 21, 2016. In order to be eligible for the tax credit, geothermal heat pumps must meet Energy Star criteria.

Water Heaters:  $300 for gas, oil, propane water heater

Biomass Stoves: $300

Solar Energy Systems:  30% of the cost up to $2,000 for solar water heating,   30% of the cost for photovoltaic systems ($2,000 cap no longer applies)

Small Wind Energy Systems:  30% of the cost, up to $500 per half kW of capacity (not to exceed $4,000)

Fuel Cells:  30% of the cost, up to $1,500 per half kW of power capacity

For our house project this is the list of tax credits we will be able to apply to our 2009 taxes:

1. Windows/Doors: $200 for our Pella Windows and $500 for our doors = $700

2. Our DaVinci composite slate roof = $500

3. Our spray foam insulation from Atlas = $500

4. Our Geothermal Heat and AC System = $1750 state (max) and approximately 30% of our cost which looks to be totalling around $100k, so that is $33k in tax credits we get to apply in coming years.

5. We get $500 for an ENERGY STAR appliance.

Considering we owe on our taxes annually this is a significant benefit to us. There’s money on the table for everyone right now, and you still have three months to have systems and products installed, so take advantage!

 Posted by: KDL | follow me on Twitter: newscaster

Day 4 of Geothermal: What Does a Geothermal System Cost?

 The most popular question I am asked in building a green home is “what does it cost?” Everyone makes the immediate assumption that it will always cost more to go green. Our geothermal system has proven this theory wrong.

A geothermal system for the home will cost more upfront than if you bought a separate forced-air gas-fired or oil-fired furnace and central air conditioning system, but not as much as you might think. Out initial outlay is going to NET around $6k more upfront than comparative systems but will cost us less after our tax rebates and the system offers long term savings for us as well.

One of the greatest advantages of our geothermal system is its ability to lower the monthly out-of-pocket expense for the life cycle of our house. The current trend of lowering a home’s operating costs is one that is only going to continue. As the U.S.  looks to build a smart grid over the next ten years and increase our renewable energy supplies, geothermal systems will be a key element in making a home comfortable and efficient.

In our cost analysis we compared three systems covering approximately 4500 sq/ft:

System A:Five-zone hydro air heating (85% efficient) and cooling system (11 EER) using oil boiler and tankless on demand water tanks and dual Environmental Recovery Ventilators (ERVs) COST: $118,750.00

System B:Five zone Viessman hydro air heating (95% efficiency) and cooling system (13 EER) using propane gas boiler and two 85-gallon domestic hot water tanks and dual ERVs COST: $129,200.00 (NOTE: We do not have natural gas in our neighborhood, we had to look at propane, this was an added cost to this system both upfront and in the long run. That said; oil was never an option for us. We did look at radiant heat as well but the cost increase was significant.)

System C:Five zone Geothermal hydro air heating (3.5 COP (this is equivalent to a 99% efficiency rating)) and cooling system (16.9 EER) using ground source heat pump, dual EVRs and a Superheater COST: $135,501.00

If you are looking into this for your home, to get an accurate comparison of the costs, I also suggest you consider the following:

  • Payback, or how long it takes to recover the difference in costs between the two systems using energy savings. Payback for most geothermal heat pump systems runs three to five years. We have no payback time once we get our tax credit.
  • Energy efficiency of the two systems. To get an accurate picture, make sure efficiency claims are substantiated. Your lifestyle and how well your home is insulated affect how economical a system will be. Our geothermal system has a 3.5 COP and 16.9 EER, this is higher than any competitive system on the market, so we are also getting higher efficiency for less money.
  • Total operating savings from heating, cooling and domestic hot water must be combined to get an accurate picture of total energy savings. (See our table.)
  • Energy costs and availability, both present and future. (We didn’t use this for payback because we didn’t need to, but you can safely assume a 4% rise in oil and gas and 2% for electricity.) 
  • Maintenance costs and system reliability. (We have a 2 year parts and labor warranty. And the system maintenance is equivalent to that of any boiler.) 
  • System lifespan – with a 25 year expected lifespan
  • Other uses, in our case we are tapping into the geothermal well to fill our rainwater harvesting tank when it is low. This completely eliminates the need for our irrigation system to use municipal water.

If you look at the three systems outlined in TABLE 1.0 you can see the heating source, the cost per unit for installation. You can also see the listing for the cost of the plumbing system for each since it impacts domestic hot water. TABLE 2.0 then takes what you spend per year on oil or gas and then compares it to the geothermal system for heating, cooling and DHW. The annual cost to run the geothermal system is averaged at nearly $5k per year less than a propane gas system.

geothermal chart in word for blog

As noted, we also have substantial tax rebates. According to the language, the Geothermal System is defined as a system that produces and stores energy to heat buildings, cool buildings or produces hot water. Our system does all of these things so our deductions include 30% federal (which totals all materials, equipment and labor) and 25% state (capped at an assumed max system cost of $7000, so this is a $1750 state rebate), plus our ENERGY STAR rebate on the total cost of our system. This totals $42,900 (approximately) and can be carried to following years on our federal returns if unused.

So in looking at what we paid, the initial upfront cost was $6301 higher, but with our tax rebates it is easily the least expensive system. We also save $5985 estimated per year on costs for fuel and to run the system. We will never have a bill for oil or natural gas. We will have a system that does not fry and dry my homes air, it will be comfortable. We have a system that eliminates the need to use municipal water for our landscaping but backs up our rainwater harvesting system. And finally, our family will eliminate 19.6 tons of carbon dioxide from entering the atmosphere annually.

If you are looking to build new or replace a system, geothermal is an excellent option. You can easily add solar thermal and PV to the system as well, all option we are including in our long term path once we put money back in our savings account.

posted by KDL | follow me on Twitter: newscaster