Tag Archives: tax credits

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 AC  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.

Tax Credits to Make Homes and Buildings More Energy Efficient for Heating and A-C

Listening to National Public Radio yesterday, I heard a report that discussed the use of tax dollars to renovate schools to make them more energy efficient. Of course, this sounds like a good idea. A follow up search on Google delivered the Schools for Energy Efficiency website. According to this source, one-third of the energy currently being consumed in schools is not used efficiently, and annual energy usage for heating and air conditioning costs up to $250 per student. This means that schools spend more on energy for heating and A-C than on books and supplies!

A similar situation exists with home air conditioning and heating. The condition of the envelope of the home (windows, doors, insulation, vents and the parts of the home that interface with the outside environment) has a lot to do with how well any heating or A-C equipment will heat or cool inside. The federal government still has programs in place to help homeowners make energy efficiency improvements, and a good place to start reading about them is on the Energy Star website. There, we found the following statement:

Tax credits for these residential products, which had expired at the end of 2007, will now be available for improvements made during 2009. However, improvements made during 2008 are not eligible for a tax credit.

To learn more about these programs you should ask your tax advisor and a local heating and A-C contractor. They should know which federal, state or local programs are available in your area to offset some of the costs of home improvements for energy efficiency.

If you know of a good case history or other example of home or building renovations to save energy in your area, please tell us about them in a comment or email them to us.