Tax Credit for Qualified Insulated Garage Doors

© 2007 Door & Access Systems
Publish Date: Summer 2007
Author: Naomi Angel
Pages 66

Tax Credit for Qualified Insulated Garage Doors
By Naomi Angel, DASMA Legal Counsel

In the 2006 winter issue of Door & Access Systems, we reported that taxpayers who make energy-saving home improvements, such as installing insulated garage doors, might be eligible for a tax credit as provided for in the Energy Tax Incentives Act.

We are pleased to report that this has been confirmed by a March 28, 2007, letter from the Internal Revenue Service (IRS) to DASMA.

An Incentive to Buy

Garage door dealers can offer customers a significant incentive to buy qualifying insulated residential garage doors—a tax credit! Tax credits are more valuable than an equivalent tax deduction, because a tax credit reduces tax dollar-for-dollar, while a deduction only decreases the amount of income that is taxed.

How to Be Eligible

To be eligible for the tax credit, the purchased garage door must meet all of the following qualifications:

¨ The door must be an insulated residential garage door.
¨ It must be installed on an insulated garage.
¨ The door must have a U-factor equal to or less than 0.35, even if the door contains glazing.
¨ The door perimeter must have a means to control air infiltration.
¨ The door must be installed in the years 2006 or 2007.
¨ The door must be expected to remain in service for at least five years.
¨ The garage must be part of the taxpayer’s principal U.S. residence.

The U-Factor Factor

The U-factor of a particular garage door must be determined by testing using ANSI/DASMA 105, Test Method for Thermal Transmittance and Air Infiltration of Garage Doors. This standard is the only current consensus test method for determining the garage door U-factor.

Calculating the Credit

A homeowner’s tax credit is based on the total material cost of the purchase (the cost of installation does not qualify). The tax credit is equal to the sum of 10 percent of all qualified energy-saving improvements installed in an existing home between Jan. 1, 2006, and Dec. 31, 2007. The maximum credit is $500.

For example, if a customer paid $2,500 in material costs for two qualified insulated garage doors, that customer would be eligible for a $250 tax credit. If the material costs were $1,000, the tax credit would be $100.

The Certification Statement

Your manufacturer must provide a manufacturer’s certification statement for all insulated garage door models that meet the IRS requirements. Dealers should provide this certification statement to the homeowner along with a breakdown of the cost of the door(s) and the cost of labor.

Remind your customers that they should keep a copy of the certification statement for their records, but they do not need to submit a copy with their tax return. For more information, contact your manufacturer.

This article is provided solely for informational purposes and does not constitute legal advice. If you have specific questions or concerns about a legal issue, consult your company’s legal counsel for guidance.