Contractors working to beat deadline as energy efficiency tax credits set to expire
If you planned to replace windows, insulate your attic or add central air to your home to qualify for a federal energy efficiency tax credit, your time is almost up.
Projects that qualify for the tax credits must be completed -- that means installed and ready to go -- by Dec. 31. Everything from biomass stoves to water heaters to energy-saving windows and doors are eligible for the up to $1,500 credit, but can they be installed in time?
A list of home improvements that qualify for the energy efficiency tax credits is available here.
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Window manufacturers, the state builders association and several Minnesota contractors say yes -- for the most part. It will be a busy six weeks, though.
"Looking at the business I was doing last spring and the business I'm doing now, it's triple what it was," said Jim Gander, owner of Rochester-based Superior Mechanical, whose furnace replacement department has been busy installing new energy efficient models.
Gander said he's added staff to his department and has sought customers looking to take advantage of the tax credits. It takes Gander's company about two weeks to complete a job after it's been scheduled, meaning customers won't be able to wait until the last minute.
"I think we're going to be in pretty good shape to accomplish all the installations we need to accomplish," Gander said, but he said new jobs ordered after Dec. 10 might not make the deadline.
New windows and door projects might have an even earlier cutoff date.
At Andersen Corp., based in Bayport, Minn., officials said turnaround time is usually two to three weeks, but that doesn't include whatever time it takes to remove an old window or door and install the new one.
"We're not putting one date on the calendar, because it truly does depend on what you're ordering," Andersen spokeswoman Susan Roeder said.
Roeder said the company is working at capacity to fill orders and that most customers still have time to finish their door and window projects.
Bob Alf, a remodeling contractor based in St. Paul, cautioned that window projects that go beyond replacement often require lengthy bid approval processes that can place a project's timeline at up to six weeks.
"It would be very difficult for someone to start a [window] project now and see it completed by the deadline," said Alf, who also works as a coach and adviser for construction projects.
But Alf said insulation, some roofing projects, and replacement of furnaces, air conditioning systems and water heaters can all be done in time.
The tax credit maximum is $1,500, but it can include more than one project. The catch is that the homeowner only gets credit for 30 percent of the project's cost. So if a new energy efficient window costs $600, the tax credit would be $180.
Installation costs can be applied in some cases, such as for a furnace replacement or stove installation.
TAX CREDITS AN ECONOMIC BOOST
The tax credits have likely had the biggest financial impact on window, door, HVAC and water heater manufacturers.
"A demand for replacement products has thrived in this economy," said John Kirchner, a spokesman for Marvin Windows and Doors based in Warroad, Minn. "We've seen a nice little bump this fall as people are trying to work within [the tax credit deadline]."
Contractors who install the energy efficient products have also benefited, although installation costs can't always be included in the tax credit.
Several groups are pushing in Congress for the tax credits to be extended, but it's by no means a sure thing. Their best hope is to negotiate an extension of the tax credits into whatever deal is reached on extending the Bush-era tax cuts.
"We are appealing to the consumers, to the people who want to see this tax credit extended to urge their members of Congress to do everything possible to pass the extenders in the lame duck session," said Brad Penney, government relations director for the Alliance to Save Energy based in Washington, D.C.
Penney said the IRS hasn't provided numbers on how many people so far have taken advantage of the tax credits, which were a part of the federal economic stimulus package Congress passed in 2009. But he said consumer interest has been high.
Karen Linner, director of codes and research for the Builders Association of Minnesota, said the tax credits have brought contractors and heating and air conditioning companies across the state more work than they would have had during a housing crisis and economic recession.
They've also provided a nice incentive for consumers who might initially think new windows, for example, are too expensive in a down economy, she said.
"Most people who have done their windows have been thinking about it for a long time," Linner said. "The tax credit has been great to push them over the edge to actually do it."
