Gather Little by Little

When we purchased our current home, we knew it would require some work and a few upgrades. Namely some new paint, repairs to some of the work the owners did (but didn’t do correctly) and yard work. The big item we knew we would have to address was the upstairs. When the original owners built the house, they left the upstairs unfinished. The middle area of the upstairs was finished off as an office later, but it’s very obvious the work was done by the homeowner, and unfortunately not done well at all. Then, when the owners decided to sell, their real estate agent recommended the remainder be finished off as well. They finished it, but did even a worse job than before and cut corners. For example, the middle office area has drywall ceilings. The two outer rooms have cheap suspended ceilings.

We knew when we bought that the upstairs would need to pretty much be redone. The other major issue with the upstairs was that being originally unfinished, it has no heating or AC. Over the past few weeks, I decided to call around to some various heating and AC companies to get quotes. In the process, I learned about the new tax credits for up to 30% of the cost when home owners make energy efficient improvements to their homes. These new tax credits were introduced as part of the federal government’s economic stimulus package, passed in February. This is a one time tax credit only, and is capped at $1, 500.

The trick with all of this is focusing in on the items that are actually worth it, as in many cases the cost of the upgrade doesn’t justify the tax credit savings. Most financial experts agree that items worth considering are:

Add Insulation

Insulation is the least expensive energy efficiency upgrade that qualifies. Installation of new insulation can also help you save an additional 20% on your energy bill as well.  To qualify, new insulation must meet the 2009 International Energy Conservation Code (check product labeling or call the manufacturer) and carry a two-year warranty (or be expected to last five years).

Insulation is measured in R-values, which stands for thermal resistance. It should range between R-30 to R-60. Each inch of insulation is equal to three to five R-value. R-30 insulation, by this rule, would range between six and 10 inches.

Taking a peek at the insulation installed by our homeowners upstairs made me realize this something we’ll need to replace when we refinish the upstairs area. They didn’t use adequate insulation, and this is probably one of the many reasons my electric bills were so so high over the winter.

New Windows and Doors

Need new doors or windows? Now’s the time. Prior to the new tax credits, upgrades to doors and or windows would only provide a max tax credit of $200.00. The new changes raise that to $1500.00, but as with the insulation, only if the they new doors or windows meet certain requirements.

In order to qualify, Windows, doors and skylights require a label from the National Fenestration Rating Council (NFRC) that says their U-factor is no more than 0.30.  U-Factor is the measure of how well they window or door will insulate your home from heat. The required label must also list a Solar Heat Gain Coefficient (SHGC). SHGC measures how much of the sun’s heat penetrates into the home. The SHGC must be no more than 0.30. Storm doors also qualify BUT they must be accompanied by a tax credit eligible wooden door without exceeding a combined U-factor of 0.30

New doors and windows are expensive though, so really take a hard look before jumping in and doing upgrades on these items.   But, if you’ve been putting off replacement of a few windows or need a new door, now’s a good time.

Installing Air Conditioners

This is the one that has my attention. To qualify, central air conditioners need a Seasonal Energy Efficiency Ratio (SEER) of at least 16 and an Energy Efficiency Rating (EER) of at least 13. SEER measures the efficiency of the unit, and EER measures how the unit operates once the outdoor temperature reaches 95 degrees.

I had two different companies come up last week. So far I’ve received a quote from one for $8200.00 for a tax credit qualifying unit, duct work, and labor. Less than I expected actually, and with the $1, 500 tax credit that reduces the overall cost to $6,700. Not an expense we were going to do right away, but with a $1, 500 savings on the line, we’re seriously considering it.

Some things to consider

There are a few things you to consider/be aware of. Determining if the various products meet the requirements is tricky, so do your homework. Dealers for these products are very quick to mention that tax credits and use that as a selling point. They won’t guarantee they qualify though. So you’ll really need to make sure you research the product yourself. For example, just because an item is “Energy Star” compliant, doesn’t mean it qualifies.

Also, don’t forget it’s not an immediate savings, and you won’t see the savings until you file your 2009 taxes.  It is a tax credit, so you’ll receive the full $1500.00 (assuming you’ve spent enough in upgrades).

Photo by: Velo Steve