Energy Saving Tax Credit - Cash for Caulkers Bill

First there was “Cash for Clunkers”, now there’s “Cash for Caulkers.” Maybe I watch too much children’s programming and not enough of the news, but I only recently heard of “Cash for Caulkers”.

I was aware of the program, in which credit is given, up to $1,500, for installation of energy efficient products such as air conditioning units and such, as we had to replace our upstairs air conditioner several months ago. The program gives you, at tax time, a credit of 30%, with a maximum credit of $1500. It was nice to see my tax refund bumped up by $1,115!

The “Cash for Caulkers” program has not yet been finalized; it was only proposed in December 2009. Its premise is to reimburse homeowners for purchases of insulation and energy efficient appliances. The details have not yet been worked out; therefore, the bill hasn’t been passed yet. The buzz is that a homeowner could receive up to $12,000 in rebates.

What is likely to happen is that homeowners would hire a private contractor to conduct a home energy audit.  Based on the result, the homeowner would buy the necessary gear through the contractor and have him/her install it.  Big ticket items like air conditioners, heating systems, windows, and insulation would likely be included.

What is being reported is that consumers may be eligible for a 50% rebate on the price, as well as the installation, of the equipment, up to $12,000.  There is no income restriction on who is eligible as of yet.

The benefits could include seeing energy bills drop as much as 20%, depending on what improvements are made, of course. 

The problems are that it is not yet known how the program will be administered.  Rebates could be issued directly to consumers.  Homeowners could see it as a tax credit.  It could be state run.

The problem with there being no immediate, on-the-spot rebate is that consumers would have to spend a lot of their own money up front to get the credit, which, in this economy, may render the program unused.  People are struggling enough to pay their mortgages and not many can afford to pay upfront for these large improvements; therefore, this program would not be attractive to them. 

One idea to avoid this is to have contractors or large retailers, such as Lowes and Home Depot, pay part of the cost up front.

Another consideration that’s crucial to the proper implementation of this bill is the potential for fraud, especially if it’s run through a third party.  There will have to be a lot of checks and balances in place to oversee the proper distribution of the billions of dollars that this program is expected to cost. 

Now -- with this proposed “Cash for Caulkers” program gaining momentum -- is a great time to put your home on an “energy diet.”  Exercising and eating properly can help a body shed weight – similarly, smart adjustments and investments in your home can shed dollars off your utility bills.  A homeowner can shell out hundreds for home energy monitoring tools, but you don’t have to. 

Microsoft actually has a free service, called Hohm, that can help you get started determining where you can save energy – and dollars.  Check it out at www.microsoft-hohm.com.  It will take you through a series of questions about your home, like square footage, you zip code and such, and it will then create a personalized report for you. 

The personalized energy report contains tips on how to save energy and makes suggestions for home improvements.  It even projects the pricing for you and how long it will take you to recoup your investment.  Of course, the more information you provide, the more accurate the recommendations you get back will be.  It’s not a bad option for a free one, and what you get out of it can be your to-do list of energy efficiency improvements.  If it does nothing else, it may help make you more aware of your energy consumption habits. 

Some simple and affordable things you can do right now that can impact not only your utility bill, but the environment as well, are:

• Replace regular light bulbs with compact fluorescent ones.  Many people don’t like the light from these types of bulbs and if you are one of those people, then at least replace bulbs in places you don’t spend a lot of time in like closets, hallways, laundry room, and attic.
• Combine laundry loads and wash more cycles on the cold water setting – this can make a big difference in your monthly bill, especially if you normally use warm or hot water for all your laundry loads.

This, as well as being aware of your energy consumption, can go a long way toward helping the environment and your bank account.  Give it a try.