How to Cash In on the Replacement Window Tax Credit

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If you are looking to save some money on a home improvement project this year, consider starting with those old windows. A new federal tax credit can put 30% of what you spend on new energy-efficient windows back into your pocket. And the savings won't stop there: New windows will lower monthly bills, reduce condensation and protect your furniture and fabrics from sun damage. Keep reading to cash in on this opportunity. Money Back: Understanding the Tax Credit Energy-efficient vinyl-framed replacement windows from Simonton. In a nutshell, if you buy energy efficient home improvement products that meet specific requirements—you get up to 30% of your money back. And while windows aren't the only credit-worthy products (doors, roofing, and insulation are some other items that can qualify for the kick-back), they are an easy place to start. For a replacement window to qualify for the tax credit, it must have a U-factor rating of .30 or below and a Solar Heat Gain Coefficient (SHGC) rating of .30 or below. Both ratings can be found on the National Fenestration Rating Council (NFRC) label, which will be displayed on the product. "The lower the U-factor and SHGC ratings, the more energy efficient the window," says Tom Herron, communications and marketing manager for NFRC. "We call it the '30/30.'" The "30/30" ratings for U-factor and SHGC required to qualify for the tax credit are measurements of the most important energy efficient qualities of a window. The U-factor is a measurement of the window's effectiveness at preventing heat loss. Naturally, this measurement relates to heating costs in The NFRC label indicates the "30/30" rating needed to qualify for the Federal Tax Credit for Energy Efficiency. the winter. The SHGC rating measures the window's ability to block heat caused by sunlight. The SHGC value for a window indicates the fraction of transmitted and absorbed solar radiation admitted into the home. Remember: the lower the U-factor and SHGC, the better. "Although the tax credit can help you reduce the cost of the windows by 30 percent, the real savings are in the long term with reduced energy bills. You can't recoup all of your money all of a sudden," says Herron. You might remember the previous Federal tax credit for "Energy Star" windows which awarded a $200 credit. The new system is more stringent, informs Kathy Ziprik, public relations representative for Simonton Windows, a window manufacturer. To make matters more complicated, the government imposed a "safe harbor" provision: up until June 1 of this year, the purchase of any Energy Star-labeled window would qualify for the new Federal Tax Credit for Energy Efficiency (30% of the cost up to $1500). Sorry, you don't get the $200 AND the 30%. Then on June 1 the original "30/30" rating specifications were reinstated. Tip: The tax credit on windows, doors, roofing and insulation applies to the cost of the product itself; it does not cover the installation cost. Any replacement window (or credit-worthy product) purchased must be "placed in service" between January 1, 2009 and December 31, 2010, and used in primary residences only. Go to the next page to learn how to redeem your credit.

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