Energy Tax Credit for Window Shades or Blinds? Watch out! The view isn't so clear.
Interested in buying some window shades or blinds that qualify for a federal tax credit in 2010? Lots of retailers are promoting the purchase of "energy efficient" shades. But watch out! They will likely not qualify for a tax credit. That means the tax collector will be coming after YOU.
So what's going on? How can companies be advertising tax credits if there aren't any tax credits. Well, they are seizing upon some ambiguity in the federal law. The retailers "argue" that the tax credits apply, however, in order for a product or product category to be covered by the credit, the product must be primarily designed to reduce heat loss or gain of a dwelling unit in or on the dwelling unit. [i.e. insulation is “primarily” designed to reduce heat loss or gain; and while a byproduct of a window covering may be energy efficiency, it is not the product's primary design] For example, page 3 of the IRS Bulletin .03 “Specifically and Primarily Designed” This section explains that drywall or siding [even though they provide an “R” value] would not qualify because these products primary function is to provide structural support.
If a manufacturer of a window covering is making the claim that their product qualifies as a window improvement, the products performance must be recognized by the NFRC and window treatments are not recognized by the NFRC. The product must also provide a .30 “U” Factor and .30 Solar Heat Gain Coefficient.
The IRS has not issued specific guidance on this issue yet. However, window treatments can only be covered by the tax credits if they are 'specifically and primarily designed to reduce heat loss or gain'. Because most window treatments are specifically and primarily designed for decoration and privacy they probably don't qualify. Most blinds would not qualify. In theory, if a manufacturer created blinds that provide a .30 “U” Factor and .30 Solar Heat Gain Coefficient. then they will have met these requirements. They'd need to then issue a certification of that fact.
So the upshot is that if the blinds are really designed for energy efficiency and meet the stringent requirements then they MAY qualify for tax credits. Unfortunately, the manufacturers aren't at much risk as they aren't withholding payment from the IRS. That would be YOU. And the IRS hasn't made a clear determination on this point so they could come after you for that $1500 (or any subset of that amount).
Our advice: if you are buying window shades, buy ones that look good and work well. If you want to save energy, invest in double-pane, high-efficiency windows. And if you already have such windows, then the shades won't provide a whole lot more insulative benefits anyhow. So don't pay more for what will amount to mere window dressing.