Home owners are eligible for a tax credit of up to $500 for 10% of the costs of qualified energy efficiency improvements made to their homes. Therefore, if a homeowner spends $5,000 on new qualifying insulation, they are eligible for a $500 Federal tax credit. This is a more generous credit than the previous tax credit of up to $500 for 10% of the costs.
To qualify for the tax credit, insulation levels must meet the requirements of the American Recovery and Reinvestment Act of 2009. Refer to the map below for state-by-state R-value recommendations. These levels should meet the criteria for the Federal tax credit. For the majority of homeowners, this will mean adding between R-19 and R-30 insulation in their attics.
Recommended Insulation Levels (R-Values)
Which areas of my home should I insulate to be eligible for the tax credit?
The tax credit applies only to improvements made to the building envelope since that affects energy use. The envelope is defined as the area along the perimeter of the home that separates the living space from the outside. This includes attics, foundation and exterior walls, basements and crawl spaces.
Consumers who want to take advantage of the Federal tax credits for their homes must install the products between January 1, 2013 and December 31, 2013.
The IRS guidelines state that only the cost of the insulation products is eligible for the tax credit, and installation fees are not eligible. However, there are still many good reasons to hire a contractor, such as installation of loose-fill insulation, to ensure proper and safe installation, and if one does not have the skills to perform the job themselves. It is important to make sure an itemized receipt containing only the costs of the insulation materials is obtained from the contractor, as labor charges will not be eligible for the credit.
Complete information on the paperwork required to claim the tax credit can be obtained from the IRS. Consumers will need to turn in an itemized retail or contractor receipt clearing proving the full amount spent on insulation materials within the eligible time period of January 1, 2013 through December 31, 2013. A Manufacturer’s Certification Document from the insulation manufacturer should also be filled out and turned in with the other documents.
Please carefully consult the Internal Revenue Service (http://www.energystar.gov/index.cfm?c=tax_credits.tx_index) guidelines on how to qualify for the energy efficiency tax credit.