Fiscal cliff deal protects home energy benefits

Matthew Grocoff

February 8, 2013

By: Matthew Grocoff, Green Renovation Expert

In: Finance and LegalGreen Living

Aaayaaahhhhhhhh! That was the sound of the nation falling off the fiscal cliff for a few hours before a deal was reached just after the new year. Yayyyyyy! That was the sound of relieved homeowners who are planning energy-efficient home upgrades and new appliance purchases in 2013.

Congress passed the American Taxpayer Relief Act of 2012 in the wee hours of January 1, 2013 (the Act). President Obama signed the Act into law on January 2, 2013.

Highlights of the Act

solar energy panels installation

Installation of solar energy systems

Happily remaining in the fiscal cliff deal was an extension of tax credits for energy-efficient improvements to existing homes. Tax credits for renewable energy sources, energy-efficient homes and appliances, alternative fuels, and even electric motorcycles were all extended after President Obama signed the deal after late night wrangling with Congressional Republicans.

  • Tax credit for energy-efficient improvements to existing homes and for updates to eligible property reflecting improvements in energy efficiency
  • Tax credit for the construction of energy-efficient new homes that achieve a 30 percent or 50 percent reduction in heating and cooling energy consumption relative to a comparable home constructed under standards in effect for 2003
  • Tax credit for U.S.-based manufacturers of energy-efficient appliances
In a statement, Rob Gramlich, the American Wind Energy Association's interim CEO said "now we can continue to provide America with more clean, affordable, homegrown energy, and keep growing a new manufacturing sector that's now making nearly 70 percent of our wind turbines in the U.S.A."
Homeowners looking to lease renewable energy systems also benefit from these commercial extensions. Third-party residential system owners like Sunrun, Clean Power Finance and SolarCity may be able to use depreciation to cut costs for residential systems.
Also, the measure provides one-year tax credits for energy-efficient additions such as exterior windows, doors, and skylights which are eligible for the non-business energy property tax credit; alternative-fuel-vehicle refueling stations; a $2,500 tax credit for two-wheeled or three-wheeled plug-in electric vehicles; and construction of energy-efficient new homes and the purchase of energy-efficient appliances. See the text of the bill.
For homeowners, there is still a 30% Residential Renewable Energy Tax Credit for the cost of residential wind turbines, solar photovoltaic (PV) systems, solar hot water systems, and geothermal heat pumps. That tax credit is available through 2016 and was not impacted by the fiscal cliff negotiations.

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