ARRA 2009 on Biomass Stoves:

  1. The tax credit increases from $300 to 30% of the total cost, up to $1,500.  Considering that the stoves typically cost about $3,500 to $4,000 installed, “that’s a huge chunk of the cost,” says Leslie Wheeler, director of communications at HPBA.
  2. The credit extends to purchases made in 2009 and 2010.
  3. The efficiency of qualifying stoves (at least 75%) is based on “a lower heating value.”

To be eligible for the 30% tax credit, biomass-burning stoves must be at least 75% efficient “as measured using a lower heating value.”  A 75% efficient stove is one that returns 75% of its energy used in the form of heat.  “Lower heating value” refers to the amount of heat released.  Fireplaces are not eligible.  As of May 31, 2009, fireplace inserts are not eligible.  Visit www.hpba.org for updates.

 From Remodeling Magazine

American Recovery and Reinvestment Act of 2009

Within weeks after the stimulus legislation took effect, reports began circulating of homeowners believing, mistakenly, that certain products and services were eligible for the tax credits.  Such widespread confusion has been tracked back, in some cases, to misleading, unclear, or flat-out misrepresented advertisements and marketing messages from installers and manufacturers.

And it can put remodeling contractors in the uncomfortable if not money-losing position of needing to put projects on hold while trying to sort out the truth, or being the bearer of the bad news that those windows or labor costs, for instance, are not in face eligible for the tax credits.

Also bear in mind that the homeowner tax credit is just $1,500 total for most types of improvements.  Given the aggressive promotions of many manufacturers and installers, your clients may be under the mistaken impression that they get a $1,500 tax credit for their new windows, another $1,500 tax credit for their new roof, another $1,500 for their new insulation, etc.

For improvements to the building envelope — windows, doors, skylights, roofing, and insulation — the tax credits are limited to 30% of the cost of the qualifying goods, with a maximum credit of $1,500.  Keep in mind that this is a one-time-only credit.  In other words, if a homeowner purchased windows qualifying for the full $1,500 credit and then purchased a roof that also qualified for the tax credit, he or she would be eligible to claim only a single credit of $1,500.

Product Plus Labor

With HVAC and renewable, however, the 30% tax credit is not capped, and the credit is based on product and installation.  A homeowner could, for example, qualify for a $1,500 tax credit for windows based on product only, and also qualify for a tax credit for a qualifying solar water heating system based on 30% of the solar system’s total purchase price, including installation.

A taxpayer must file a 1040 form to claim the credit.  You cannot claim the credit if you are filing a 1040EZ tax form.

Expanded coverage, including IRS rules, updates, and interpretations, can be found online at:

www.thestimulussource.com

Or, for more information on the American Recovery and Reinvestment Act of 2009, you may visit the IRS online at:

http://www.irs.gov/newsroom/article/0,,id%3D204335,00.html

From Remodeling Magazine

New Tax Deductions and Credits Proposed for Green Products

From HVAC to roofing products, the American Recovery and Reinvestment and Act (ARRA) initiated tax credits for a range of energy-efficient home improvements, mostly related to a home’s mechanicals or building envelope. With the legislation focusing on reducing the biggest aspects of a home’s energy use, other product categories were not addressed in the Act, despite being classified as sustainable products.

One such area is kitchen cabinetry, which the Kitchen Cabinet Manufacturers Association (KCMA) has worked hard to “green” with its Environmental Stewardship Program (ESP). But with the proposed legislation, cabinetry, carpeting, countertops, flooring, and other home furnishings may also become eligible for tax deductions and credits.

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Market Watch: “Luring first time home buyers”

CHICAGO (MarketWatch) — A federal tax credit of up to $8,000 is nudging many Americans into buying a home for the first time, good news for those trying to sell one.

Still, selling a home isn’t easy in most markets today. To get the typical first-time buyer to bite and submit an offer, a house has to stand apart from the competition — and there’s a lot of it, including foreclosure homes that are selling at hefty discounts.

One big thing working in favor of the traditional seller: A lived-in, maintained home is easier for buyers to imagine themselves living in than a vacant foreclosure. That has great appeal for someone buying a home for the first time, for practical and financial reasons.

“First-time buyers are skeptical of buying homes that need improvement. Sellers certainly don’t need to remodel the kitchen, but they want to make sure that their home showcases very well,” said Eric Mangan, a spokesman for ForSaleByOwner.com.

Read the full article