US Govt Tax Incentives & Rebates
Highlights of IRS Energy Policy Act of 2005 For Individuals
FS-2006-14, Jan. 2006
During 2006, individuals can make energy-conscious purchases that will provide tax benefits when filling out their tax returns next year. The new law provides tax credits for making your principal residence, which must be in the United States, more energy efficient and for buying certain energy efficient items. At the same time the law provides credits for various types of alternative motor vehicles, including hybrids.
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IRS Releases Guidance On Energy Efficiency Tax Credits
March 01, 2006
The U.S. Internal Revenue Service (IRS) issued guidance on February 21st on the tax credits for new energy efficient homes and for energy efficiency improvements to existing homes, as established by the Energy Policy Act of 2005. A credit of up to $2,000 is available for eligible contractors who build a qualified new energy efficient home and sell it either this year or next. The credit is available for all new homes, including manufactured homes constructed in accordance with the Federal Manufactured Homes Construction and Safety Standards
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New Energy Efficient Home & Vehicle Tax Credits
The Energy Policy Act of 2005, the new national energy law signed by President Bush on August 8, 2005, provides valuable federal tax credits for consumers who purchase fuel-efficient hybrid-electric vehicles and who make certain, specified energy-efficiency upgrades to their homes.
Consumers who employ energy-efficient products in their homes or drive fuel-efficient vehicles enjoy multiple benefits. At home, these benefits include lower home energy bills, increased indoor comfort, and reduced air pollution. On the road, consumers will increase their gas mileage so they lower their gasoline costs, and they will dramatically reduce the amount of air pollution from their vehicles.
In addition to helping savvy consumers lower their energy bills at home and on the road, the energy-efficient products eligible for the new federal tax credits actually lower the amount of federal income taxes that these taxpayers must pay Uncle Sam.
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US Energy Star Tax Credits For Energy Efficiency
Home Improvements- Tax credits are available for many types of home improvements including adding insulation, replacement windows, and certain high efficiency heating and cooling equipment. See chart. The maximum amount of homeowner credit for all improvements combined is $500 during the two year period of the tax credit. This tax credit applies to improvements made from January 1, 2006 through December 31, 2007.
Efficient Cars- Tax credits are available to buyers of hybrid gasoline-electric, diesel, battery-electric, alternative fuel, and fuel cell vehicles. The tax credit amount is based on a formula determined by vehicle weight, technology, and fuel economy compared to base year models. These credits are available for vehicles placed in service starting January 1, 2006. For hybrid and diesel vehicles made by each manufacturer, the credit will be phased out over 15 months starting after that manufacturer has sold 60,000 eligible vehicles. For vehicles made by manufacturers that have not reached the end of the phase-out, the credits will end for vehicles placed in service after December 31, 2010.
Solar Energy Systems- Tax credits are available for qualified solar water heating and photovoltaic systems. The credits are available for systems "placed in service" in 2006 and 2007. The tax credit is for 30 percent of the cost of the system, up to $2,000. This credit is not limited to the $500 home improvement cap.
Fuel Cells- There is a consumer tax credit of up to 30% of the cost (up to $500 per 0.5 kW of capacity maximum) for installing a "qualified" fuel cell and microturbine systems. The credits are available for systems "placed in service" in 2006 and 2007. This credit is not limited to the $500 home improvement cap.
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US Business Energy Tax Credit
The Energy Policy Act of 2005 (H.R. 6) expanded the business energy tax credit for solar and geothermal energy property to include fuel cells and microturbines installed in 2006 and 2007 and to hybrid solar lighting systems installed on or after January 1, 2006. (A 10% federal energy tax credit is available to businesses that invested in or purchased solar or geothermal energy property in the United States prior to January 1, 2006.)
For eligible equipment installed from January 1, 2006 through 2007, the credit is set at 30% of expenditures for solar technologies, fuel cells and solar hybrid lighting; microturbines are eligible for a 10% credit during this two-year period. For equipment installed on or after January 1, 2008, the tax credit for solar energy property and solar hybrid lighting reverts to 10% and expires for fuel cells and microturbines. The geothermal credit remains unchanged -- at 10%.
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USDA: US Renewable Energy Systems & Energy Efficiency Improvements Program
Section 9006 of the 2002 Farm Bill requires the U.S. Department of Agriculture (USDA) to create a program to make direct loans, loan guarantees, and grants to agricultural producers and rural small businesses to purchase renewable-energy systems and make energy-efficiency improvements. This program is known as the Renewable Energy Systems and Energy Efficiency Improvements Program.
The maximum grant award is 25% of eligible project costs up to $500,000 for renewable energy projects and up to $250,000 for energy efficiency improvements. Assistance to one individual or entity is not to exceed $750,000. The minimum grant request is $2,500 for renewable energy projects and $1,500 for efficiency projects. Eligible renewable energy projects include wind, solar, biomass and geothermal; and hydrogen derived from biomass or water using wind, solar or geothermal energy sources. Applications must be submitted to the appropriate Rural Development State Office.
Under the guaranteed loan option, funds up to 50% of eligible project costs (with a maximum project cost of $10 million) are available. The minimum amount of a guaranteed loan made to a borrower is $5,000. A combined grant and guaranteed loan under this program cannot exceed 50% of eligible project costs, and the applicant or borrower is responsible for having other funding sources for the remaining funds. The maximum percentage of guarantee ranges from 70% to 85% depending on the loan value; the percentage for a given project will be negotiated between the lender and the Rural Business-Cooperative Service. The interest rate will be negotiated between the lender and the applicant and the repayment term must not exceed 30 years for real estate, 20 years for machinery and equipment, and seven years for working capital.
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US Residental Solar & Fuel Cell Tax Credit
The Energy Policy Act of 2005 (H.R. 6) establishes a 30% tax credit up to $2,000 for the purchase and installation of residential photovoltaic (solar electric) and solar water heating property. An individual can take both a 30% credit up to the $2,000 cap for a photovoltaics system and a 30% credit up to a separate $2,000 cap for a solar water heating system. A 30% tax credit up to $500 per 0.5 kW is also available for fuels cells.
Solar water heating property must be certified for performance by the Solar Rating Certification Corporation or a comparable entity endorsed by the government of the State in which the property is installed. Note that the tax credit does not apply to solar water heating property for swimming pools or hot tubs.
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US Energy Star Financing & Mortgages
An ENERGY STAR Mortgage combines the features of conventional or FHA energy-efficient mortgages with at least one additional feature designed to encourage borrowers to purchase ENERGY STAR qualified new homes. Common additional features include closing cost discounts, payments for home energy ratings, interest rate discounts, and fee waivers.
"Energy Efficient Mortgages" (or EEMs) make it easier for borrowers to qualify for loans to purchase homes with specific energy-efficiency improvements. Lenders can offer conventional EEMs, FHA-insured EEMs (or VA EEMs), ENERGY STAR Mortgages, or loans that combine the features of these different mortgages.
Conventional EEMs are offered by some lenders who sell their loans to Fannie Mae and Freddie Mac. These EEMs increase the purchasing power of the borrower by allowing the lender to increase the maximum Principal, Interest, Taxes and Insurance (PITI) amount by a dollar amount equal to the estimated energy savings. Loan officers are required to submit a HERS report or an Energy Addendum (Form 1004A or Form 70A) to verify the expected energy savings.
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US FCIC Energy Efficient Mortgages (EEM)
When you are buying, selling, refinancing, or remodeling your home, you can increase your comfort and actually save money by using the Energy Efficient Mortgage (EEM). It is easy to use, federally recognized, and can be applied to most home mortgages. EEMs provide the borrower with special benefits when purchasing a home that is energy efficient, or can be made efficient through the installation of energy-saving improvements.
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US HUD Energy Efficient Mortgage (EEM)
The Energy Efficient Mortgages Program (EEM) helps homebuyers or homeowners save money on utility bills by enabling them to finance the cost of adding energy-efficiency features to new or existing housing as part of their FHA-insured home purchase or refinancing mortgage.
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US Veteran's Administration Energy Efficient Mortgage
Eligibility: Purchase & Refinance
Improvement Financing: 100% of the energy improvements subject to the following limits:
(a) Up to $3,000 based solely on documented costs
(b) Up to $6,000 provided that the home energy rating projects the reduction in monthly energy savings exceed tje increase in the monthly mortgage payment
Down Payment: No additional down payment on the energy improvements if the improvements can create positive cash flow
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