You asked how the tax exemptions included in SB 2100 will affect a person who is building or renovating his home.

TAX EXEMPTIONS UNDER SB 2100

SB 2100, adopted during the October 2005 Special Session, exempts “residential weatherization products” from the sales and use tax from November 25, 2005 to April 1, 2006. Under the bill, these products are:

1. insulation;

2. window film;

3. caulking;

4. window and door weather strips;

5. water heaters, natural gas furnaces, and windows that meet the federal Energy Star standards; and

6. oil furnaces that are at least 85% efficient.

The exemption applies to the person buying these goods. If a contractor buys the goods as part of a construction or renovation job, he would receive the tax benefit. Whether he passes this benefit on to the homeowner would be negotiated between the contractor and owner. If an owner is doing the work himself and buying the goods, he would receive the tax benefit. The tax exemption is not retroactive, so if an owner or contractor has already bought the goods, he would not be eligible for a tax credit. Further information about the federal Energy Star program, including a list of products that meet its standards, is available at http: //www. energystar. gov/.

RELATED FEDERAL TAX INCENTIVES

Even if the owner does not receive the tax exemption provided by SB 2100, he may be eligible for federal tax credits for energy efficiency measures. HR 6, enacted earlier this year, provides federal income tax credits for homeowners who make energy efficiency improvements from January 1, 2006 through December 31, 2007. The eligible measures are:

1. added insulation to walls, ceilings, or other part of the building envelope;

2. replacement windows;

3. high-efficiency gas, oil, and propane furnaces and boilers;

4. high-efficiency central air conditioning units, including air-source and ground-source heat pumps;

5. high-efficiency fans for heating and cooling systems;

6. high-efficiency water heaters, including heat pump water heaters

The credits are (1) 10% of cost of added insulation, up to $ 500; (2) 10% of the cost of replacement windows, up to $ 200; (3) $ 150 for qualifying furnaces and boilers; (4) $ 300 for qualifying air conditioning units; (5) $ 50 for qualifying heating fans and cooling systems; and (6) $ 300 for qualifying water heaters. A homeowner is eligible for the state sales tax exemption and the federal tax credit for measures that meet the eligibility criteria of both laws.

The federal act also provides tax credits for builders of energy efficient homes. Builders are eligible for a $ 2,000 tax credit for a new energy efficient home that achieves 50% energy savings for heating and cooling over the 2004 International Energy Conservation Code and supplements. At least 20% of the energy savings must come from building envelope

improvements. There is a similar provision for energy efficient manufactured homes. The tax credits apply to qualified new homes built or produced from January 1, 2006 through December 31, 2007.

Further information about the federal tax credits is available at http: //www. energystar. gov/index. cfm?c=products. pr_tax_credits#2.

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