Insulation Tax Credits
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American Recovery and
Reinvestment Act-Home Insulation
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Insulation - a Quick, Easy
Way to Earn Your Tax Credit...and Save on Energy
Bills
Inadequate insulation is one of the main
reasons why the average American home is losing
between 10 and 50 percent of its energy. Because
insulation is a homeowner’s primary defense
against heat loss through the ceiling, walls,
floor and basement, the Federal government is
offering homeowners a tax credit as an incentive
to install the proper level of insulation in
their homes. Insulation is one of quickest,
easiest and most effective ways to improve the
energy efficiency of a home. It is an investment
that keeps paying off with better comfort and
energy savings for as long as you own your home.
The higher the R-value you have in your home,
the greater the insulating power.
Who gets it?
Homeowners who install IECC recommended
amount of insulation.
How much insulation do I
need in my area?
R-38 (see map below)
How much is the credit?
The tax credit amount is now 30 percent of
the cost of the material. There is a cap on the
credit amount of $1,500 for fiscal years 2009
and 2010 combined; thus the credit applies to up
to $5,000 in total costs.
What is a Tax Credit?
A tax credit is generally more valuable than
an equivalent tax deduction because a tax credit
reduces tax dollar-for-dollar, while a deduction
only removes a percentage of the tax that is
owed. 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.
What do I need to do to
get the tax credit?
You will need to file IRS Form 5695 with your
taxes. In addition, you will need to keep at
least receipts proving that you purchased the
improvements and a copy of the manufacturer’s
certification.
When is it available?
The home improvements tax credit applies for
improvements "placed in service" from January 1,
2009, through December 31, 2010. The IRS defines
"placed in service" as when the products or
materials are ready and available for use - this
would generally refer to the installation, not
the purchase.
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Zone |
Add
Insulation to Attic |
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Uninsulated Attic |
Existing 3-4 Inches of
Insulation |
| 1 |
R30 to
R49 |
R25 to
R30 |
| 2 |
R30 to
R60 |
R25 to
R38 |
| 3 |
R30 to
R60 |
R25 to
R38 |
| 4 |
R38 to
R60 |
R38 |
| 5-8 |
R49 to
R60 |
R38 to
R49 |
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Sources:
irs.gov,
simplyinsulate.com,
ASE.org
(alliance to save energy)
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