Tax Credits Help Building Construction

http://www.tennessean.com/article/20091221/BUSINESS01/912210312/1003/NEWS01

With a 4,400-square-foot home and four sons, David LeFeve uses quite a bit of energy — about $600 per month, in fact. So, in an attempt to make his home more energy efficient, he replaced his 12-year-old heating and air conditioning system recently and hopes to save about $50 a month as a result. He'll also be rewarded with a total of $1,500 in tax credits from the federal government for doing so.

"I plan to make the house as energy-efficient as possible,'' said the Nashville homeowner. "The tax credit sort of pushed me over the line."

A few home building contractors say federal income tax credits passed in February to encourage energy-efficiency projects are helping out in a recession that has cut into revenue for many of them. While new home building has come to a near standstill, weatherization and energy-efficiency upgrades for existing homes have helped plug some of the financial gaps.
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* Energy tax credits

The tax credits aren't motivating everyone to act. Homeowners still have to spend $5,000 to be eligible for the full $1,500 tax break. That's because the tax credit equals 30 percent of the total costs of energy improvements, and only equipment that meets certain requirements qualifies.

Still, the tax credits seem to be changing what sort of new energy-saving systems go into people's homes. At Hiller Plumbing, which installed two units in David LeFeve's home, about 80 percent of all the heating and air systems it has sold qualify for the credit, which lasts until the end of 2010.

"I think it's wrong to offer somebody a system that won't qualify,'' said owner Jimmy Hiller. "It will cost them more in operating costs alone. Plus, with the $1,500 coming off, you can buy a more efficient unit for less."

Last month, the company got a new heat pump water heater that qualifies for the tax credit. So far, it has installed five of them at a cost of about $2,000 to $2,700, including labor.