Thursday, April 17, 2014


 
Residential Tax Credit for Window Films
Update on Residential Energy Tax Credit for 2011

The residential energy tax credit for home improvements has been extended thru 2011. There is less money allowed per household at a lower percentage of the cost and there is a lifetime limit which applies to the total credits per household from 2006 thru 2011. Window films would still be considered an “insulation” product rather than a “window” product by definition. As before, questions about individual window films used on specific homes in specific climate zones of the U.S. can only be answered by the manufacturer of the window film, as the requirement for a Manufacturer’s Certification Statement is still in effect.

The following is a quote from the website of the Department of Energy:
 “On December 17, 2010, President Obama signed the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010. This law extends the tax credits for energy efficiency into 2011, BUT at lower levels. The levels revert back to those in effect in 2006 and 2007, which were 10% of the cost of the improvement, up to $500, with a $200 max for windows, and several other set maximums.

Highlights:
  • 10% up to $500 for insulation, roofs, and doors.
  • Windows capped at $200, but qualification now ENERGY STAR
  • Furnace and boilers capped at $150, and all furnaces and boilers must meet 95 AFUE
  • $50 for advanced main air circulating fan
  • $300 for air conditioners, air source heat pumps, water heaters, and biomass stoves 
  • $500 lifetime limit. If you got over $500 in these tax credits from 2006-2010, you are not eligible for anything more.
Again, any other questions about the eligibility of any specific window film use will have to be answered by the manufacturer of the window film product.

Update on Stimulus Bill Effect on Residential Tax Credit for Window Films
(Updated and published March 12, 2009)

Amount qualifying for credit which was 10% of film cost up to maximum total credit of $500 is increased retroactively for qualifying window film installations to January 1, 2009, to 30% of film cost up to maximum total credit of $1,500. This credit is in addition to any credit used in previous years.

The tax credits for qualifying window film installations have been extended through the end of 2010, but the stringency for installations to qualify became more difficult beginning February 17, 2009.

Credits can only be taken for installation of window film products certified by the product manufacturer as qualifying for such credits. The consumer should be instructed to check the manufacturer’s website and/or other published information to verify the products being purchased do in fact qualify. Effective February 17, 2009, many products which previously may have qualified will not be listed as qualifying after that date due to increases in stringency of energy efficiency requirements for fenestration and insulation which go into effect at that time, since the new standard for compliance for films will be the 2009 International Energy Conservation Code (IECC).

All questions on whether specific products and installations will qualify should be answered by the window film manufacturer or its agents. The IWFA can only answer general questions about the credit itself and not about specific products or uses. In addition, the IWFA does not offer legal tax advice to the industry or the public, so all manufacturers and consumers should check with their own tax professional or legal counsel for advice on their particular situations.

Window Films Qualify for Tax Credit in 2009
 On October 3, 2008, President Bush signed into law the “Emergency Economic Stabilization Act of 2008.” This bill extended tax credits for energy efficient home improvements (windows, doors, roofs, insulation, HVAC, and non-solar water heaters). Tax credits for these residential products, which had expired at the end of 2007, will now be available for improvements made during 2009. However, improvements made during 2008 are not eligible for a tax credit. The home improvement tax credits apply for improvements “placed in service” from January 1, 2009, through December 31, 2009.

After a review of this legislation and its implications for the window film industry, the International Window Film Association (IWFA) has determined that window film again may qualify for consideration for the tax credit. A description below explains all the considerations. Of course, the IWFA cannot give specific tax advice to any individual, so check with your tax advisor if you have any questions about whether you qualify to use this credit.

Window film qualifies as “insulation”. The installed window film in combination with the window on which it is installed must meet the 2000 IECC and Amendments which would be the 2004 Supplement to the 2003 IECC.

Except for the change of date in the “placed in service” requirement, this is the same criteria as for the credit in 2006/2007 tax years.

Insulation

Meets 2000 IECC & Amendments10% of cost, up to $500

For insulation to qualify, its primary purpose must be to insulate. Definition of insulation is a material or system which becomes part of the building envelope and has the primary designed benefit to reduce solar heat gain or heat loss through the building envelope.
  • Must be expected to last 5 years OR have a 2 year warranty
  • Installation costs are not included.
  • Manufacturer's Certification Statement required.
  • For tax purposes, save your receipt and the Manufacturer's Certification Statement.
  • Use IRS Form 5695
  • Must be “placed into service” between Jan. 1–Dec. 31, 2009
Each window film manufacturer must decide which of its products qualify for the credit when used in each climate zone of the energy code listed above. A Manufacturer’s Certification Statement must be made available to the taxpayer (either by the installing dealer or manufacturer or from the manufacturer’s website) who purchases the qualifying window film. This statement and a copy of the invoice should be retained by the taxpayer for his/her records, although it is not required to be filed along with the IRS Form 5695 at the time of tax filing. To find out which films qualify from a particular manufacturer, you must check with that manufacturer or its representatives. No one else can make the determination for the manufacturer of which products it chooses to certify for the tax credit use.

If credit is claimed for a film which does not have a Manufacturer’s Certification Statement, the taxpayer may be charged and found guilty of committing tax fraud; the same would be true of a manufacturer, distributor or dealer misrepresenting that a certain product qualifies for the tax credit when in fact it does not.
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