The American Recovery and Reinvestment Act of 2009 (ARRA) (Pub.L. 111–5), nicknamed the Recovery Act, was a stimulus package enacted by the 111th U.S. Congress and signed into law by President Barack Obama in February 2009. Developed in response to the Great Recession, the ARRA’s primary objective was to save existing jobs and create new ones as soon as possible. Other objectives were to provide temporary relief programs for those most affected by the recession and invest in infrastructure, education, health, and renewable energy.
FEDERAL TAX CREDITS
The U.S. Economic Stimulus Package officially referred to as the ‘American Recovery and Reinvestment Act,’ has augmented the previous tax credit for home enhancements from ten % to thirty % of the value, and raised the maximum amount of the credit from $500 to $1500.
Tax credits are now available for home improvements:
- must be “placed in service” from January 1, 2009, through December 31, 2010
- must be for taxpayer’s principal residence
- $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and windmills which are not subject to this cap and are in effect through 2016
- must have a Manufacturer Certification Statement to qualify
- for record keeping, save your receipts and the Manufacturer Certification Statement3
- improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
Insulation Qualification:
| Insulation | Meets 2009 IECC & Amendments | 30% of the cost, up to $1,5001 | For insulation to qualify, its primary purpose must be to insulate. (example: vapor retarders are covered, insulated siding does not qualify). Must be expected to last 5 years OR have a 2-year warranty |
1 Subject to a $1,500 maximum per homeowner for all improvements combined.
For More Information:
- http://www.energystar.gov/index.cfm?c=products.pr_tax_credits#c2
- The Internal Revenue Service (IRS) guidance for consumers: IRS Notice 2006-26.
This information is presented to provide general information on the new federal tax credit and is not intended to be an interpretation of eligibility for the tax credit. Please consult with a qualified tax advisor to discuss eligibility.
