How to Make Money on Your Window Investment

January 02, 2010

In 2009, the American Recovery and Reinvestment Act was passed which gave homeowners a tax credit for making improvements to their home's energy efficiency. Up to 30% of the cost of energy efficient windows can be recovered through a tax credit. Here's how to claim that credit.

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Check with the window manufacturer to see if your purchase qualifies.

The tax credit is based on two factors. The first factor is the U-Factor, which measures the heat transfer through the window, which indicates how effectively the window is insulated. The lower the U-factor the better, and to qualify for the credit the value should be .30 or lower.

The Solar Heat Gain Coefficient (SHGC) is the other factor in the tax credit. It measures the ratio of the solar heat gain entering the space through the product. It's normally expressed in a number between .20 and 1.2, and rating of .30 and lower qualifies.

Homeowners must obtain a manufacturer certification statement to document window eligibility for the tax credit. If the retailer or installer cannot provide this document, it may be available on the manufacturer's Web site.

If your home meets the following criteria, you may be eligible for the credit if your purchase is certified to meet the criteria and:

  • The home must be a taxpayer's primary residence in the United States
  • The windows must be used for remodeling or replacement - new construction does not qualify.
  • The product must be purchased and installed during 2009 or 2010. This timeframe may be extended through pending legislation.
  • The tax credit is 30% of the cost of the window up to a $1,500 limit. Installation and tax is not included in the cost of the window. Keep your itemized receipt and manufacturer's certification or product labels for your tax records. More information can be found at www.irs.gov or www.energystar.gov. For your situation, consult a tax advisor to advise you on tax filing procedures for your individual situation.

Energy Star qualified windows not only offer the potential to lower energy bills by up to 20%, they also offer added value to the home, and now, a tax credit as well. Not a bad investment!

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