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The red tape behind weatherization

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Tax credits for making your home more energy efficient got a lot of early buzz. The promise of up to $1500 back for insulation and windows or efficient furnaces led to a flurry of advertising. Tamara Keith looks into what might be stopping people from taking advantage of the tax credits.

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Transcript: Tamara Keith, October 5, 2009

Tax credits for making your home more energy efficient got a lot of early buzz. The promise of up to 1500-dollars back for insulation and windows or efficient furnaces led to a flurry of advertising. Tamara Keith looks into what might be stopping people from taking advantage of the tax credits:

My husband and I recently bought an older house that could no doubt use some weatherizing. So, I called up Reuven Walder at EcoBeco.

(sound of door opening, people saying hello)

He's a home energy auditor. He identifies ways to make a home more efficient.

"I joke around, I consider myself an energy efficiency social worker."

And he's been getting a lot of calls lately from people like me - looking to take advantage of the tax credits.

"Let's look around the house and you can point out some things that are of concern to you."

Walder has all these cool tools, like an infrared camera that can see where the insulation isn't doing its job. He finds plenty of trouble spots, including one in the attic.

"And if you put your hand in this little pocket here you can feel nice cool air."

That's not supposed to happen.

"I'll be honest with you. When I find these kinds of things, it makes my day, because we get to fix them."

Well, not all the time. Walder says only about a third of the homeowners he works with actually follow through on his recommendations.

"I have talked to numerous homeowners and their primary reason for not doing it is money."

He says the tax credits are a great shot in the arm, but, for many people, it's just not enough. Part of the problem is, for simple weatherizing - insulation, weather stripping, windows - the tax credits apply to 30% of the cost of materials, not the labor. And labor is actually the most expensive part.

"Our economy is just so slow right now that people are just hesitant to spend any amount of money because, regardless of the incentive, they're still going to have to spend a lot of money to make the improvement. It's not going to cover a significant portion of the cost."

At this point, federal officials don't know how many people have been inspired by the stimulus package to do work on their homes. They won't know until everyone files their taxes in April.

"It's definitely driving additional business."

Matt Golden is president of Efficiency First - the national association for the home performance retrofitting industry. But he isn't totally sold on the way the stimulus package is distributing the tax credits.

"The biggest incentives are for the most expensive fanciest equipment and as you move towards the most cost effective stuff, you get much smaller, incremental incentives."

So, there's big money for solar panels and geothermal heating systems. And if you want to put in a tank-less hot water heater or a super efficient furnace, here labor costs can be counted towards tax credits. Golden says the smallest credits go to insulation and other simple steps.

"It's actually kind of an impediment to the type of retrofitting projects that have the biggest return on investment, bang for the buck and create the most jobs."

In my house, Walder estimates we need almost $6,000 worth of work. But, because not all of it qualifies, I'll only get $600 of it back from the government - but we won't see the money until tax season.

I'll admit - it's a lot more money with a lot less of a tax benefit than I was expecting, and that's probably what's giving some homeowners pause.

For The Environment Report, I'm Tamara Keith.

Copyright 2009. The Regents of the University Of Michigan. Used with permission.

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