The Residential Energy Efficient Property (REEP) credit equals 30% of expenditures to install: (1) qualified solar water heating equipment, (2) qualified small wind energy equipment, (3) qualified geothermal heat pumps, (4) qualified solar electricity generation equipment, and (5) qualified fuel cell equipment (up to $1,000 per kilowatt hour).  These qualifying expenditures tend to cost more than the qualifying expenses for the "Non-business Energy Property Credits.’"

NOTE:  There may be federal, state, or local programs that provide subsidized financing to help defray the cost of installing some of these items, which obviously makes them more affordable.  In 2009, expenditures made from subsidizing energy financing can qualify for the REEP credit, if they otherwise meet the requirements for those credits. 

A good place to start your search for an energy efficiency product is at www.energystar.gov/taxcredits where you’ll find a table listing requirements for various products.  But, how do taxpayers know for sure if the product they purchase satisfies the required energy saving conditions for the credit?  Fortunately, it is the manufacturer’s responsibility to apply to the IRS for the proper certification and, according to the IRS, the taxpayer can rely on the manufacturers certification.  The manufacturer can provide the certification statement by including a written copy of the statement with packaging of the property, in printable form on the manufacturer’s website, or in any other manner that will allow the taxpayer to retain the certification statement for tax recordkeeping purposes.  The taxpayer should keep a copy of this certification as part of his or her tax records.

Sources:

Internal Revenue Service, IRS.gov

RIA Checkpoint, Tax Action Memo, TAM-1349

For more information, please contact Tim Lieb at 215-564-1900.

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