57°F Tax Credits
Don’t be fooled;
The Truth About Energy Tax Credits for HVAC
The American recovery and reinvestment act of 2009 (ARRA) was enacted by the U.S. congress in febuary 2009. Included in this so-called Stimulas package is $4.3 billion allocated for home energy credits intended to encourage homeowners to invest in making their homes more energy efficient during 2009 and 2010.
The provisions of this law allow homeowners to recoup up to 30% (1500 maximum) of the installed cost for a wide variety of projects—from installing energy efficient doors and windows to upgrading to high efficiency air conditioners, heat pumps and furnaces. Reimbursement of these expenses is handled as a non-refundable personal income tax credit under section 25C of the internal revenue code.
COMMON QUESTIONS REGUARDING TAX CREDITS FOR HOME HEATING AND COOLING EQUIPMENT.
What is a non –refundable tax credit?
In general tax credits are used to reduce your Federal income tax liability. Non-refundable tax credits can only reduce this liability to zero, but not below. In other words, they cannot result in a refund but you may be able to carry a balance forward into future tax years.
How do homeowners claim the tax credits?
It is strongly recommended that homeowners consult a tax professional to understand how this tax credit applies to their unique situation. Taxpayers should keep copies of invoices and receipts for qualified projects and obtain the manufacturers certification statements pertaining to the specific product models purchased and installed. The tax credit is applied for using IRA tax form 5695 in combination with their 2009 or 2010 tax returns.
ARE THERE OTHER RESTRICTIONS THAT THE HOMEOWNER SHOULD BE AWARE OF?
Yes. This tax credit applies only to projects performed on the principle residence of the taxpayer. It must be owned by the taxpayer and be a residential single-family dwelling.
WHAT ARE THE LIMITS FOR THIS TAX CREDIT?
Qualified home heating and cooling equipment must be installed and operating between January 1 2009 and December 31, 2010.
CAN A HOMEOWNER CLAIM A TAX CREDIT OF $1500.00 IN 2009 AND THEN AGAIN IN 2010?
No. Homeowners are eligible for a maximum of $1500 tax credit for 2009 and 2010 combined, not for each year individually. Similarly the $1500 is for all qualified projects combined, not for each project individually.
WHAT ARE THE REQUIREMENTS FOR HOME HEATING AND COOLING EQUIPMENT TO QUALIFY FOR THE TAX CREDIT?
The general guidelines specified under the ARRA legislation are based upon minimum energy efficiency requirements depending upon the type of equipment installed:
Split central air conditioners rated at 13.0 EER or higher and 16 SEER or higher
Packaged central air conditioners rated at 12.0 EER or higher and 14 SEER or higher
Split air source heat pumps rated at 12.5 EER or higher and 15.0 SEER or higher.
Packaged air source heat pumps rated at 12.0 EER or higher and 14.0 SEER or higher and 8.0 hspf or higher.
Gas furnaces rated at 95.0 % AFUE or higher
Oil furnaces rated at 90.0% AFUE or higher.
HOW DO I KNOW IF MY EQUIPMENT QUALIFIES FOR THE TAX CREDIT?
Manufacturers must provide certification statements for their products that meet the requirements for the tax credit. Consult with your equipment dealer or the equipment manufacturers web site.
