ENERGY CREDITS FOR HOMEOWNERS
The Treasury Department and the IRS have released Notice 2006-26 providing guidance
on tax credits for homeowners who make energy-efficient home improvements. The
Energy Policy Act of 2005 added a new Nonbusiness Energy Property Credit (IRC
*ƒ‚§25C) available for tax years 2006 and 2007 (filing seasons 2007 and 2008) only. There
are two categories of property that qualify for the credit.
Qualified energy efficiency improvements. These are eligible building envelope
components that meet or exceed criteria established by the 2000 International Energy
Conservation Code that are installed in the taxpayer primary residence. Eligible items are:
Insulation material or systems.
Exterior windows, skylights, or doors.
Storm windows and storm doors installed over certain types of windows and doors.
Metal roofs.
Taxpayers may rely on the manufacturer certification statement that an item is an eligible
building envelope component, with this caveat: the component must be installed in a
climate zone identified in the certification statement. In addition, storm windows and
storm doors must be installed over the type of exterior window or exterior door specified
in the statement. As an alternative to a manufacturer certification statement, taxpayers may
treat exterior windows and skylights bearing an Energy Star Label as eligible building
envelope components provided the property is installed in the region identified on the
label.
Residential energy property expenditures. Similarly, taxpayers may rely on manufacturer
certification statements to claim the Nonbusiness Energy Property Credit for qualified
energy property including:
Electric and geothermal heat pumps.
Central air conditioners.
Natural gas, propane, or oil water heaters.
Natural gas, propane, or oil furnaces.
An advanced main circulating fan used in a natural gas, propane, or oil furnace.
