Category Archives: HVAC Tax Credits

Federal Tax Credits For Air Conditioning and Heating Systems Expire Soon

If you have been considering buying a new A/C and heating system, you should start taking action, because the Consumer Energy Efficiency program is set to expire December 31 of this year. This is less than 120 days away.

To learn more you can visit the federal government Energy Star website.  I find this website to have a lot of useful information about the tax credit requirements. Included in that info is the following statement (with the first sentence written in red on their website for emphasis)

Please note, not all ENERGY STAR qualified products qualify for a tax credit. ENERGY STAR distinguishes energy efficient products which, although they may cost more to purchase than standard models, will pay you back in lower energy bills within a reasonable amount of time, without a tax credit.

As we mention in our video that describes how to compare the cost of AC and heating systems installed be sure to get the details in writing from the local HVAC contractor who installs your equipment, verifying that the installed equipment meets the federal guidelines for the tax credit.  The reason: it will be later, when you send in your tax returns, that you are able to take the tax credit, and you would not want to find out then that the equipment or installation date did not qualify.

Since these programs are, in our opinion, triple wins we hope that another program or an extension will be available.  In our next blog, we will write about state tax credits and rebates.  If you have experience related to this topic, please post so others can get the benefit of your knowledge.

Tax Credit of $1,500 For New Heating and Air Conditioning Systems

As a provision of the American Recovery and Reinvestment Act of 2009, homeowners can now receive up to $1,500 in tax credits when they install qualifying high-efficiency heating and ACA  equipment into an existing home.

Difference in a tax credit and tax deduction
Before going further, we will point out that this is a tax credit, not merely a deduction. Basically, a deduction reduces the amount your tax bill is calculated from. A tax credit offsets the amount of taxes you owe. In all cases, talk to your tax advisor before taking action.

The act allows 30% of the amount invested for qualifying equipment and during specific dates in calendar 2009 and 2010, up to a maximum credit of $1,500. This means that qualifying expenditures can be up to $5,000. Although the focus in our blog is on HVAC equipment, the total credit also applies to certain types of energy efficient windows, doors, insulation, solar water heaters and other energy saving items. At the risk of belaboring the point, one credit covers all these categories, not one credit per category.

Special provisions for geothermal heat pumps
If you are considering a geothermal heat pump (or solar water heater) we are hearing that there are some extra stimulus incentives, including higher allowances and more years to qualify.  Ask your tax adviser and contractor for the details.

Get the details in writing
In reading air conditioning and heating industry news and blogs, there is some confusion over which replacement equipment qualifies (or which efficiency standard to rely upon) for the efficiency standards of the act. This is not unusual for the early stages of a new tax credit and the complexities of the U.S. tax code. Because of this, we advise you to get the details in writing from your contractor or tax advisor as to whether (or not) any purchase you are considering qualifies for the tax credit.

Our wish is that you enjoy more comfort, lower energy usage, and lower monthly bills.