You are probably thinking the bad economy in the spring of 2009 is a really bad time to think about remodeling anything. But if you have the money, there really has been no better time in several years. The prices of many materials are down, many contractors and subcontractors are charging less to keep busy, and the “American Recovery and Reinvestment Act of 2009” is offering Federal income tax credits that are three times anything we’ve seen in years!
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If you decide to take advantage of the circumstances and remodel your kitchen, there are three steps to getting the rock bottom price for your project.
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STEP 1: Understand how your kitchen remodel can take advantage of the Economic Recovery Act’s energy efficiency tax credits. Most qualifying improvements will earn tax credits of 30% of their cost. Just keep in mind that you can only claim a total of $1,500 in credits per tax year. Here are some things to consider:
a.      Choose the best and most energy-efficient windows you can afford. Make sure they RemodelOrMove.com: Contractor Selection Workbookmeet the requirements in the law and that they have the right UV coatings. You can take a tax credit for 30% of the cost of the windows. 
b.      Upgrade walls with high-efficiency insulation. You might also use the remodel as an opportunity to insulate all of your pipes (this can make a noticeable difference in your water heating costs. You can claim 30% of the cost of the insulation.
c.      If your kitchen has an exterior door, you can replace it with an energy-efficient new door and claim 30% of the cost.
d.      Your remodel might be a good time to think about the efficiency of your heating/cooling system. You might consider installing a new system for the kitchen or for the whole house. Whether you choose a photovoltaic (solar) heating/cooling system, residential small wind energy system, or geothermal heat pump, these systems allow you to claim a tax credit of 30% of their cost, without limit.
e.      Think also about your water heater. You might want to update your water heater, put the kitchen on a separate system or install tankless instant water heater(s) in the new kitchen. Choosing an instant water heater won’t earn you any tax credits, but it will reduce your hot water costs. But if you install a Solar Water Heating system, you’ll save a bundle on operating costs and you’ll qualify for a Federal tax credit of 30% of the cost with no limit on the amount you can claim.
 
STEP 2: Find out what kinds of tax credits, rebates and special financing options are available through your state government and your local utility company (gas, electric). For example, if you live in South Carolina, you would qualify for a number of other incentive offers:
  • If you install a geothermal heat pump, Palmetto Electric Cooperative will pay you a rebate of $200 per ton (up to a limit of $1,000 per household). Berkeley Electric Cooperative will pay you a rebate of $250 per ton (up to a limit of $1,250 per household).
  • If you install a Solar Water Heater, the State will pay a rebate of $1,000 per home.
  • If you make a purchase during the month of October, you can take advantage of a sales tax exemption of Appliances, Water Heaters, Lighting, Programmable Thermostats, Windows and Doors.
  • The Palmetto Clean Energy (PaCE) Program offers production incentives on photovoltaics, wind, geothermal electric and small hydroelectric systems. The amount varies by technology and customer demand.
  • The State has a Solar Energy Tax Credit program that lets taxpayers claim a credit of 25% of the costs of purchasing and installing a solar-energy system for heating water, space heating, air cooling, or generating electricity in a building owned by the taxpayer. The maximum allowed in any given year is the lower of $3,500 or 50% of your state tax liability that year; but the excess credit can be carried forward for up to ten years.
Information on every state is available at http://www.dsireuse.org.
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STEP 3: Look for opportunities to save on materials, appliances and labor. You might need to shop around some and buy wherever you find the lowest price for each item, but you can find some really great deals. Here are a few examples:
  • It’s the perfect time to buy kitchen cabinets. Sales have been way down for some cabinet manufacturers – down 40% from December 2007 to December 2008, and back up only 10% in the first quarter of 2009. Whether because of spring remodeling season or the bad economy, you can save between 10% and 50%. And remember: cabinets will account for at least one-fourth of your total kitchen remodeling cost.
  • Lumber prices have fallen to a thirteen-year low
  • Major appliances are sale priced 10% to 30%
  • Drywall prices are down a little bit
  • Floor coverings are being marked down 10% or more
 
If you really are thinking about the environment, be sure the ventilation system you buy for your remodel will be high-efficiency. Keep energy-efficiency in mind also when you look at fans and lighting. Follow these three steps, shop wisely and carefully, and you can do a major kitchen remodel for thousands less than you could have a year ago.
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