Tax credits still a sales tool

March 10, 2011 By    

Energy efficiency is still at the forefront of the new federal incentive program for residential construction. Last December, Congress passed legislation extending tax credits related to residential energy efficiency.

Homeowners now have another year to take advantage of tax credits for energy efficient propane furnaces or water heaters. The legislation also allows homebuilders to receive federal tax credits for high-efficiency homes built in 2010 and 2011, by extending the corporate tax credit that was in place through 2009.

Even though some of the incentives have been cut back, the program still offers a marketing opportunity for propane retailers. The incentives can be used to add new propane applications in existing homes and ensure that propane is the primary energy source in new construction. Communicating with consumers and builders is the key to success.

The summary describes credits for propane equipment, and in some cases they may also cover other building systems.

In addition to the federal incentive program, there are many state and local efficiency upgrade plans that allow propane customers to combine incentives. Some of these programs have income restrictions to qualify. Check at for the latest programs available in your state.

At last count, 15 state or regional propane associations offer rebates to consumers and builders for the safe installation of a wide variety of propane applications. Propane associations can promote those programs through the website that PERC has established for construction professionals.

If you don’t think these assorted rebates add up to much, guess again. Using Michigan as an example, a qualifying homeowner can receive up to $950 in incentive money to upgrade to a propane tankless water heater.

Smart marketers should take advantage of the incentive money to short-circuit the electric water heater business in their marketing area.

There is a free online training course titled Designing and Retrofitting with Propane Gas that has information on how incentives can fit into building and remodeling plans. This course and related information are available by visiting the website

Builders, remodelers, HVAC contractors and your employees can use this information to help make propane the energy of choice for your customers.

Federal incentives for propane building systems

1. Personal Tax Credit for Homeowners: Residential Energy Efficiency Tax Credit
Eligible property: Heating and water heating equipment serving a dwelling in the U.S. that must be the taxpayer’s primary residence.
Incentive: Personal tax credit equal to the full cost of the equipment (including installation cost), subject to the following caps:
■ $150 – Propane furnaces with an annual fuel utilization efficiency (AFUE) of at least 95 percent
■ $300 – Propane water heaters with an energy factor (EF) of at least 0.82 or a thermal efficiency of at least 90 percent
Limit: The maximum credit that can be earned is $500. Past credits earned by a taxpayer from 2006-10 under this credit are applied toward this limit.
Expiration date: Dec. 31, 2011

2. Homebuilder Tax Credit: New Energy Efficient Home Credit
Eligible property: These credits are available for homes that reduce heating and cooling energy consumption by 50 percent relative to the International Energy Conservation Code. High efficiency propane systems are a very effective tool in helping to achieve this efficiency level.
Incentive: The federal tax credit for homebuilders was extended by Congress in December 2010 and now applies retroactively to qualifying homes acquired after Dec. 31, 2009, and before Jan. 1, 2012. The credit amount is $2,000 for site-built homes and either $2,000 or $1,000 for manufactured homes, depending on their level of energy efficiency. These amounts, as well as the qualification requirements, remain unchanged from prior years.
Expiration date: Dec. 31, 2011

3. Commercial Building Owners/Tenants Tax Deduction: Energy Efficient Commercial Buildings Tax Deduction
Eligible property: Heating/cooling, lighting and building envelope systems installed in qualifying commercial buildings.
Incentive: A tax deduction for building owners or tenants of up to $1.80 per square foot is available to commercial building owners who reduce the building’s total energy and power cost by at least 50 percent relative to ASHRAE standards. Partial deductions of $0.60 per square foot are available for individual lighting, building envelope or heating/cooling systems that meet target levels that would reasonably contribute to an overall building savings of 50 percent if additional systems were installed. The deductions become available in the year the system is placed in service.
Expiration date: Dec. 31, 2013

4. Homebuyer Tax Credit: First-Time Homebuyer Credit
Eligibility: For most U.S. taxpayers, this credit has expired. However, military personnel and federal employees serving outside the U.S. have an extra year to buy a principle residence in the U.S. and still qualify for the credit.
Incentive: Qualifying personnel who are first-time homebuyers can receive a federal tax credit of up to $8,000 upon purchasing a primary residence. A $6,500 tax credit can be received by certain repeat buyers.
Expiration date: Qualifying personnel must enter into a binding contract by April 30, 2011, and complete the purchase by June 30, 2011.

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