$1,500 Federal Tax Credit logo showing qualifications for the $1,500 energy tax credit

The US government, through Energy Star (a joint project of the EPA and DOE) has allocated stimulus money to promote the use of high-performance windows in residences, whether they are for new construction or replacement.

The rules:

1. The incentive is in the form of a tax credit of up to $1,500 per residence. In other words, your taxes will be reduced by up to $1,500 if you participate and qualify.

2. In a multi-family condominium, each unit could receive the tax credit if they meet all other criteria. An early consultation with the condominium accountant is recommended to ensure that this will occur smoothly.

3. The tax credit is calibrated as 30% of the cost of the window material (not installation labor), up to $1,500.

Thermal simulation of energy efficient window

4. The maximum “U-Factor” allowed is .30. “U-Factor” is a measurement of thermal transmission, also thought of as insulating value. It is the inverse of the more commonly used “R-Value”. The .30 requirement is very stringent and can not be met by every window company.

Many of us are familiar with buying R-11 insulation for our stud walls. This equates to a “U-Value” of .09. With R-Value, a higher number means greater insulating value. With U-Factor, a lower number means greater insulating value.

Thus the required U-Factor of .30 equates to an R-Value of 3.33. As hard as that is to achieve for a window, it is still nowhere as good an insulator as an average R-11 stud wall.

5. The maximum allowed Solar Heat Gain Coefficient (SHGC) is also .30.

SHGC is the percentage of solar heat admitted through the window, expressed as a decimal instead of as a percent. When we say that a window has a SHGC of .30, it is the same as saying the window allows 30% of the sun’s heat energy into the building. The lower the SHGC, the less solar heat is allowed to come through the window. Reducing SHGC, therefore, reduces cooling costs.

6. The National Fenestration Rating Council (NFRC) is the only organization recognized by Energy Star for determining the energy performance of windows, doors and skylights. The product you buy should have an NFRC label on it, displaying the U-Factor and SHGC.

7. In order to be eligible for the tax credit, qualifying products must be purchased and installed between February 17, 2009 and December 31, 2010. If you are in need of new windows, act now because it takes a while to make product and vendor selections, and manufacturing lead times can be substantial. In a multi-unit building, more time can be consumed in gaining a consensus about the project.

Timeframes to consider…

• Gain condominium consensus to proceed with project – 2 months.
• Select consultant or architect – 2 months
• Design solution, write specification – 2 months
• Bidding and selection of vendor – 1 month
• Vendor shop drawings – 1 month
• shop drawing approval – 1 month
• manufacturing – 3 months
• installation – (depends on size of project) – 1-6 months
• TOTAL DURATION 11-15 MONTHS

If you are contemplating a window replacement project and want to take advantage of the tax credit, you must start now, especially with a larger building.

PLUG: The Chicago Window Expert can find ways to accelerate the schedule to some extent, but don’t wait. Time has a way of slipping away.

8. The $1,500 tax credit is also a maximum for all energy upgrades made in 2008 and 2009. Don’t expect to get an additional $1,500 for an improved roof, water heater or insulation. You can only get one energy tax credit in 2008-2009.

9. Of course the IRS has forms, guidelines and procedures for administering the tax credit.

Here are the IRS guidelines:
http://www.irs.gov/irb/2009-19_IRB/ar08.html
Pay special attention to:
Section 4.01 subparts (3) and (4), pages 8 & 9, which define storm windows and storm doors as eligible products and provide the criteria for these products.
Sections 6.04 through 6.06, beginning page 14, which outline the requirements for the manufacturer’s certification statement.

IRS Form 5695 for 2008

Here is the form to be submitted with your tax returns:
IRS Form 5695 (it will be updated late 2009, so do an online search for it when you need it at tax time)

10. Be sure to obtain for your records the Manufacturer’s Certification Statement for the products you purchased. This is a signed statement from the manufacturer certifying that the product qualifies for the tax credit. Suggestion: you might find that due to the individual qualities of the window products, some (like fixed windows) might qualify, and some (like sliding windows) might not. If this is the case, get a separate invoice and receipt for just the qualifying products to make record-keeping easier.

The NFRC has a product finder on their site, to assist you in locating a manufacturer for your needs. This is at:
http://search.nfrc.org/search/searchdefault.aspx

Energy Star has posted overall guidelines here:
http://www.energystar.gov/index.cfm?c=windows_doors.pr_taxcredits

Energy Star explains performance ratings here:
http://www.energystar.gov/index.cfm?c=windows_doors.pr_ind_tested

Energy Star Chart showing estimated savings for choosing a qualifying product here:
https://www.energystar.gov/ia/products/windows_doors/CitySavingsEstimates.pdf

Extract of this chart for da great city of Chicago, and we included our Illinois capital Springfield, in the Southern part of Illinois…

And so you can see, dear reader, if you have stuck with me through this entire article, the real punchline is that there are dollars to be saved by changing to Energy Star-rated products. The up-front incentive of $1,500 is just the beginning. If you have single glazed windows, you could be saving $300 every year just in energy costs! If you weren’t motivated before, this should get you going.

Mark Meshulam, Chicago Window Expert

Need new windows?

Contact me, Mark Meshulam,
the Chicago Window Expert
for the expert attention you deserve.

My phone: 847-945-9200 ext 229
My email: mark@chicagowindowexpert.com

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