2008 Home Energy Tax Credits: Claim Energy Efficiency and Renewable Energy Tax Credits

Make 2008 the year to claim home energy tax credits.
Also see 2009 Home Energy Tax Credits.

Photo: Ivars Zolnerovichs / istock

By Brian Clark Howard

Luckily for homeowners, in late 2006 the 109th Congress granted a one-year extension, through the end of 2008, for federal clean energy tax credits. The 30% production tax credit (PTC) provides a 1.9-cent per kilowatt-hour (kWh) benefit (up to $2,000) for the first ten years of a renewable energy project's operation.

An individual can take both a 30% credit up to the $2,000 cap for a solar electric panel (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 kilowatt (kW) is also available for fuel cells.

Part of the Energy Policy Act of 2005, the credits had been set to expire on December 31, 2007, but due to the efforts of a coalition of clean energy supporters, they were extended for one year as part of the Tax Relief and Health Care Act of 2006 (H.R. 6408). Strong growth in U.S. clean energy installations is now projected through 2008.

Eligible solar water heating equipment must be certified by the Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. The tax credit does not apply to solar water heating property for swimming pools or hot tubs.

The credit is calculated based on the individual's expenditures (including labor) for the equipment, but excluding any other subsidized financing. That means people who take advantage of other state and local energy incentives may want to consult a tax professional to make sure they calculate the correct right offs.

To be eligible for the credit, a system must be activated on or after January 1, 2006, and on or before December 31, 2008. To apply for the credit, fill out IRS Form 5695.

Since 1992, renewable energy tax credits have expired and been extended numerous times, including in 2005, 2004 and 1999. This uncertain, unstable past has irked greens for years, who have long pointed out that a longer term extension is badly needed to really support the burgeoning clean energy industry.

Groups such as the Union of Concerned Scientists and the Solar Energy Industries Association have called for an eight-year extension to the credits.

Given that such an extension is far from a done deal, homeowners should move this year to take advantage of the valuable credits, adding long-term value to their homes while lowering their energy bills and making for a cleaner world.

Check out the Database of State Incentives for Renewables and Efficiency for a comprehensive source of information on state, local, utility and federal incentives that promote renewable energy and energy efficiency.


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