2009/2010 HVAC Tax Credits The American Recovery and Reinvestment Act of 2009 (the Stimulus Bill) increased tax credits available to homeowners who make qualified energy efficient improvements to their existing primary residences. Homeowners thinking about installing new HVAC or hot water equipment should consider the benefits qualifying equipment would provide at tax time. Not only can these credits lower your tax liability, they can also reduce your energy costs by up to 40% and provide for a cleaner environment. Homeowners who install qualified furnaces, boilers, heat pumps, central air conditioners, and hot water heaters in 2009 or 2010 may qualify for a tax credit equal to 30% of the installed costs, up to $1500. A list of equipment that qualifies can be found here. Since manufacturers are always changing their product lines, check with your contractor about qualifying equipment. Advancements in HVAC technology, energy efficiency, and performance in the last ten years means that the equipment you buy today can pay for itself in just a few years. It is important to note that the installed costs for HVAC and hot water equipment include equipment and labor. Homeowners who install qualified renewable energy efficient improvements, such as geothermal heat pumps, wind and solar energy systems, and fuel cell technologies to existing or new homes qualify for a special tax credit equal to 30% of the installed costs with no dollar limits. This tax credit is available for the years 2009-2016. These credits do not count against the $1500 tax credit limits. Qualified improvements to insulation, roofing, windows and door are also eligible for the tax credit. However, homeowner can only claim a maximum of $1500 for all qualified improvements made in 2009 or 2010. The Stimulus Bill made two important changes to previous homeowner’s tax credit programs. The Stimulus Bill removed the $500 lifetime cap from similar tax credits that were available in 2006 and 2007. Homeowners that claimed tax credits in those years may still be eligible for the full $1500 tax credit made available in the stimulus bill. The Stimulus Bill also made changes to the criteria for equipment that qualifies for the tax credits. It’s important to work with your contractor or manufacturer to make sure the equipment you install qualifies. In order to claim the tax credits, taxpayers complete and file a Form 5695 with their regular tax return. They won’t need to submit any more information, but they will be required to keep copies of the certificates provided by the manufacturers or contractors on file. As a tax credit, this incentive applies against the taxpayers’ liability, reducing the amount owed to the IRS on a dollar for dollar basis. If the taxpayer’s liability is reduced to zero with some tax credits remaining, the homeowner may carry the balance over to reduce next year’s taxes. Since everyone’s tax situation is different, always check with your tax advisor on how these tax credits can help you reduce your liability and energy costs.
SUMMARY OF TAX CREDITS FOR HOMEOWNERS
Product Category
HVAC
Product Type
Tax Credit Specification
Tax Credit
Notes
Central A/C
Split Systems: EER >=13 SEER >= 16 Package systems: EER >= 12 SEER >= 14
30% of cost, Note — not all ENERGY up to STAR products will qualify 2 $1,500 for the tax credit.
Air Source Heat Pumps
Split Systems: HSPF >= 8.5 EER >= 12.5 SEER >= 15 Package systems: HSPF >= 8 EER >= 12 SEER >= 14
30% of cost, up to 2 $1,500
Natural Gas or AFUE >= 95 Propane Furnace
30% of cost, Not all ENERGY STAR up to products will qualify for the 2 $1,500 tax credit. 30% of cost, up to 2 $1,500 30% of cost, up to 2 $1,500 30% of cost, up to 2 $1,500 30% of cost, All ENERGY STAR gas up to tankless water heaters will 2 $1,500 qualify.
Oil Furnace
AFUE >= 90
Gas, Propane, or AFUE >= 90 Oil Hot Water Boiler Advanced Main Air Circulating Fan Water Heaters No more than 2% of furnace total energy use. Read this FAQ if the fan qualifies, but the furnace does not.
Gas, Oil, Propane Energy Factor >= 0.82 Water Heater or a thermal efficiency of at least 90%.
Electric Heat Pump Water Heater
Same criteria as ENERGY STAR: Energy Factor >= 2.0
30% of cost, All ENERGY STAR electric up to heat pump water heaters 2 $1,500 qualify for the tax credit.
MORE INFORMATION CAN BE FOUND HERE:
http://www.energystar.gov/index.cfm?c=products.pr_tax_credits
http://energystar.custhelp.com/cgi‐bin/energystar.cfg/php/enduser/std_alp.php?p_sid=T_‐be9yj