Tax Incentives

This was in response to a question in a Builder Forum concerning the $1500 tax incentive for 2009 and 2010:

Tom, I've heard that from several vendors who were selling windows and insulation that the client really was doing this regardless of the cost because they wanted the tax "break". Many were spending thousands of dollars to save a small portion on their yearly tax burden. A one time benefit that they could easily have recouped by just putting the money in an IRA. Thankfully you were able to see the benefit of this "break" from the government and I hope that your business is able to generate the same numbers without the incentive.

No taxes have been cut though. Is your tax burden smaller this year? Assuming you are the business owner did your FICA, MCARE, and Fed Tax burden go down? I expect not. Will you be paying a smaller portion of your income to taxes in April? Again, I expect not. $1500 is about $30 a week for the wage earner. Would cutting payroll taxes by a small percentage create a greater "stimulus" in the marketplace? Maybe; but it would not be targeted and therefore not benefit the chosen industry regardless of who in Washington controls the purse.

What may be truly interesting is did these purchasers pay for the service with cash or did they finance it? What is the cost of that financing over the near term? Does it outweigh the benefit of the $1500? Do you truly save on your heating, cooling, or electric bill just just by replacing a window when this if factored in? Was just the sash replaced or was the trim removed and the jamb space air-sealed? Have the plate to sub-floor or plate-to-plate connections been air-sealed? Was the siding removed and a building wrap installed? In my own home air-sealing the furring cavity at either the attic or the crawl is the way to go; how many do this? Is the client willing to have a PV array large enough that it will truly give back to the grid? Or are they just cutting a monthly bill? Does this return on investment depend on your cost per kwh? Sure does. I installed an on demand hot water heater three years ago. Currently I am ahead on the electric bill by $6. At that rate it may take 750 years to pay back. I suspect I'll have to replace it by then so will it ever be cost effective? BTW - Electric rates in Virginia are some of the lowest in the country.

Potential short term benefits will come from Government action in regards to increases in consumerism on a macro economic scale when an item otherwise out of the reach is provided at a lesser cost. (Why do you think Going out of Business sales work so well?) These benefits will end when the incentive ends with nothing lasting created because there was nothing lasting to begin with.

It's too bad that your thriving business cannot sustain more employees with this incentive from the Government. It would seem that all that has been accomplished by the Government borrowing this money has been to keep you employed during this downturn. While I think that is a worthy goal I would still rather have my $30 back.

As I said I hope your business continues to grow and that you are able to prosper. Good luck!

Thanks for reading and I hope you will visit my website

www.cshadedesign.com

On Demand Hot Water Heater

My family and I have been living with an on-demand tank-less hot water heater (HWH), or instant HWH for nearly a year now. There are several things that I have learned during this time that I believe are good to share with future buyers.

1. Having a tank-less HWH does not mean that you will have instant hot water when you turn the faucet on. The water still has to travel thru and heat up the same pipes as the tank type water heater that you used to have.
2. The bigger the better. Even in the best of circumstances when the second shower is cut on the first will cool and need a little recovery time. While this is not objectionable it is a bit exciting when you are rinsing your hair in the winter and the water gets cooler.
3. We live in Virginia and have always enjoyed low electricity rates. This combined with what are reasonable gas rates make the payback for the unit about 20 years. I do not believe this to be a deal breaker. In our case there were space issues that the tank-less helped with. It is nice to be able to turn it down in the summer and up in the winter saving gas costs.
4. Summer water temperatures around 115 degrees allowed for cool showers and clean dishes. When I set the temperature below this I noticed that the dishwasher did not work quite as well. The winter temperature is now at 125 degrees and we may move it to 130 as the daily outside temperature drops lower coming into January and February.

SET THIS HIGHER TEMPERATURE ONLY IF YOU ARE COMFORTABLE THAT YOUR FAMILY UNDERSTANDS SCALDING AND POSSIBLE INJURY FROM THIS HIGH TEMPERATURE.

5. Environmental friendliness? Maybe. I do know that it is a choice for each family that bears a high upfront cost especially for replacing a tank HWH. My plumber stated that this was the first one they had done as a replacement because it costs 2-3 times as much as a conventional tank gas HWH.
6. Electric tank-less HWH use a lot of power, somewhere in the neighborhood of 120 amps or more. Your panel box would need 6-8 blank spaces to accommodate the breakers and the electric meter would look like an anemometer in a hurricane.
7. The aerator, that's the piece on the bottom of the faucet that makes the water stream pretty, needs to 1.5 gpm or higher. We had a .7 gpm aerator and it did not let enough water pass thru the system to ignite the HWH. You may want to limit your water usage but this can get you in trouble.

Hopefully this will give you some more choices in deciding about a tank-less HWH.

Please contact me at

www.cshadedesign.com

if you have other questions