Federal Tax Credits Extended for Energy Efficient Spray Foam Insulation
Inflation (and the temperature) may still be running high, but Spray Foam Insulation can help keep your home and wallet cool this year. Thanks to the Inflation Reduction Act of 2022, signed into law on August 16, 2022, many energy-efficient tax credits have been extended as far as 2032! The great news is that the tax credits are extended for homeowners, home builders, and commercial applicators. Let’s dive into the extra credits available:
SPRAY FOAM INSULATION TAX CREDITS FOR HOMEOWNERS
Homeowners have several energy-related tax credits, including credits for Energy Star-certified purchases. For spray foam insulation, you can receive a tax credit of up to 10% of the cost (not including installation labor) up to $500 in total.
To claim the credit, homeowners must fill out IRS Form 5695 (instructions here). Spray foam contractors installing this material would be wise to keep copies of this form and provide it to homeowners as part of the sales and customer service process.
The tax credit for spray foam insulation originally expired on December 31, 2021, but has now been retroactively approved for work from that date through December 31, 2032. It’s important to note that this credit only applies to the homeowner’s principal residence. New construction and rental properties do not qualify, either.
SPRAY FOAM INSULATION TAX CREDITS FOR HOME BUILDERS / GENERAL CONTRACTORS
What about new construction, then? There is good news here, too!
Since 2005, homebuilders have qualified for up to $2,000 in credit on new energy-efficient homes. These homes achieve 50% energy savings over the 2006 IECC, and 1/5 of those savings must come from the building envelope. Spray foam insulation, like Accufoam OC or Accufoam CC, will quickly help you qualify.
If you’re a home builder, file IRS Form 8908 when filing your business tax returns. Indicate how many homes you built that met or beat the 50% standard and claim your tax credits.
SPRAY FOAM INSULATION TAX CREDITS FOR COMMERCIAL BUILDINGS
Finally, additional tax credits/tax credit extensions for owners or designers of commercial buildings can demonstrate a 50% reduction in energy usage (up to $1.80/sq. ft.). Can’t hit the full 50% mark? Don’t sweat; partial deductions up to $0.60/sq. ft. are available for work that qualifies.
The credit is a bit more complex to achieve. You (or the contractor doing the work) will need to use and demonstrate the savings after the improvements.
Fortunately, most professionals can handle this. The IRS also provides solid guidance on this process here. Qualifying energy savings can be found through the building envelope, heating, cooling, ventilation, interior, and hot water systems.
LEVERAGE TAX CREDITS WITH THE BEST SUPPORT
Inflation is pinching both contractors and property owners right now. The extension of these tax credits is a helpful tool in keeping your schedule full as owners are become a bit more price sensitive and slower to make improvements. Leverage the extended tax credits for your business! If you’re in need of supporting materials on the energy efficiency of Accufoam® products, we’re only a call away! Better yet, become an Accufoam Contractor Partner and enjoy unparalleled service and resources, all for free!
