When Congress failed to extend the bill authorizing energy tax credits at the end of 2007, many home improvement company owners may not have even noticed or, if they did notice, cared very much.
Energy tax credits, in place during 2006 and 2007, were designed to encourage homeowners to invest in energy-saving products such as windows, doors, insulation, metal roofing, and solar power. Homeowners, on a one-time basis only, could recoup as much as 10% of their purchase, up to $500.
The drawback was not only the $500 limit but a $200 sub-cap on windows and skylights. In an industry where the retail cost of a window ranges from $200 to $1,500, $200 did not seem like a lot, and consumers and dealers often said: Why bother?
The good news is that energy tax credits are back, at least for 2009. With the passage last October of the Emergency Economic Stabilization Act, credits have been reinstated, with almost exactly the same limits and terms of eligibility. The credits are a one-time claim, and products are required to have been installed in the homeowner's primary residence and meet or exceed criteria established by the 2000 International Energy Conservation Code. To receive a tax credit, homeowners must fill out IRS form 5695 and submit it when they file their taxes.
The prospect of new energy tax credits that are exactly like the old energy tax credits doesn't impress everyone, however. Many home improvement company owners say that the tax credit amount offered ? particularly the $200 for windows ? is too small to prompt a warm-call lead, let alone a purchasing decision. Some say that, in the past, they were reluctant to even bring up the subject of tax credits, fearing homeowners might feel they were being nickel-and-dimed.
"With windows, it was such a small amount that it definitely didn't help," says Ken Moeslein, co-owner of Legacy Remodeling, a home improvement company in Pittsburgh. "You're almost embarrassed," he says, because company discounts offered as an incentive to buy invariably dwarf the $200 window tax credit. Moeslein says that on several occasions when salespeople closing the deal provided homeowners with a form to get the tax credit process started, the homeowner responded with: "Oh, to hell with it. It's not worth it."
That view is widespread. A.B.E. Doors & Windows, in Allentown, Pa., soft-pedaled tax credits in 2006-2007, did not mention them in its marketing, and only brought their availability up in closing. "Let's put it this way," says general manager Marc Rapchak. "If you're selling a houseful of windows for $15,000, $200 is not a significant amount."
Others in the industry, though, note that tax credits from states, municipalities, and local utilities can be combined with the federal tax credit to provide a bigger incentive for homeowners who are considering a window (or door, insulation, or roofing) purchase. (For a map showing the availability of state, local, and utility rebate programs, see the Database of State Incentives for Renewables & Efficiencies.)
There's also the fact that today many consumers are watching every penny, and the $200 that some might have sniffed at two years ago may now be more meaningful, especially when combined with local incentives.