Radiant barrier and reflective insulation products, purchased and installed in 2009 or 2010 for the purpose of insulating one’s primary residence, qualify for a federal tax credit as a result of the American Recovery and Reinvestment Act (ARRA) of 2009 signed by President Obama on February 17, 2009.
Radiant barriers and reflective insulation products qualified for tax credits in previous years, but with the signing of the ARRA, the tax credit was increased from 10% to 30% of the product cost and the maximum allowed for all improvements in 2009-2010 was raised from $500 to $1,500.
A tax credit is a direct reduction in the amount of taxes your owe as opposed to a tax deduction which is a reduction in the gross income on which taxes owed are computed. That means you can lower your total federal income taxes by up to $1,500 over a two-year period by purchasing a radiant barrier or reflective insulation product for your home.
Radiant Barrier Qualification History
With the signing of the ARRA, the definition for a qualifying insulation product was changed from previous years’ stimulus packages and this led the reflective insulation industry and consumer base to question whether radiant barriers qualified for the new 2009-2010 tax credits.
Under the ARRA, the qualifying insulation definition is based on the 2009 International Energy Conservation Code (IECC) definition for insulation which references r-values and u-values. Because the IECC does not directly reference “radiant barriers,” manufacturers were hesitant to promote their radiant barriers as qualifying for the much desired tax credit.
However, as a result of a recent meeting between the Reflective Insulation Manufacturer Association (RIMA) and the IRS in early December 2009, a position was successfully presented on how a radiant barrier reduces heat transfer (lowers U-Value) and thus was accepted by the IRS.
While not an “official” acceptance of radiant barriers on behalf of the IRS at this point, the IRS has communicated that manufacturers presenting a Manufacturer’s Certification Statement covering their radiant barriers shall be deemed valid and qualifying for the 2009-2010 ARRA tax credits until such a date that they may NOT be considered qualifying.
“may NOT be considered qualifying” – What does this mean to you as a consumer? It means that if you purchase(d) a qualified radiant barrier and you obtain a Manufacturer’s Certification Statement covering the product you purchased, your purchase is eligible for the tax credit, providing you meet the eligibility requirements put forth by the ARRA. If, at a later date, the IRS deems radiant barriers are not eligible OR the manufacturer’s products are not eligible, you are still guaranteed eligibility for your purchase made prior to this date.
Tax Credit Eligibility Requirements
For a radiant barrier or reflective insulation product to qualify for the tax credit as defined by the ARRA of 2009, it must:
- have a primary purpose to insulate in the tax payer’s primary residence,
- be installed between January 1, 2009 and December 31, 2010,
- be expected to last five years or have a two year warranty, and
- be accompanied by a Manufacturer’s Certification Statement (while this is not actually filed with your tax return, it should be saved with your purchase and tax return records).
* You are strongly advised to talk with your tax professional regarding true eligibility for any and all tax credits you may be claiming.
© 2010 Radiant Barrier Journal | RadiantGUARD.com