Have you made the decision to replace your home’s aging or inefficient cooling and heating system? Thinking about using your tax return to help pay for it? If you answered yes to these questions, then legislation passed in December may help confirm your decision and make it more affordable than ever to purchase a new system.
The Residential Energy Efficiency Tax Credit has been renewed, retroactively from January 1, 2015 through December 31, 2016. Any qualified equipment installed in 2015 or 2016 is eligible for this credit. This news comes just in time for tax return season, when many homeowners use their refunds to finance a new HVAC system. The following are some qualification requirements and details of the tax credit:
- Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence.
- The credit applies to the purchase of high-efficiency heating, cooling and water-heating equipment.
- Tax credit is 10% of cost up to $500 or a specific amount from $50-$300. The maximum tax credit for all improvements is $500.
- If tax credits of $500 were made in previous years, any purchases made in 2011-16 will be ineligible.
- High-efficiency heating, cooling and water-heating equipment eligible for tax credits, and their credit caps include:
- Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
- Electric heat pump water heater with an energy factor of at least 2.0: $300
- Electric heat pump that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Central air conditioner that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Natural gas, propane, or oil water heater that has either an energy factor of at least 0.82 or a thermal efficiency of at least 90%: $300
- Geothermal heat pumps up to 30% of cost with no cap
- Biomass stoves that use “plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.” Systems must have a thermal efficiency rating of at least 75% to qualify: $300
This tax credit can also help homeowners make the decision to replace their system now instead of waiting until it breaks down. The pre-emptive approach is often the smart move primarily for 2 reasons: first, it helps avoid costly repairs which may only be a temporary fix and, two, a new system is more efficient and will help save homeowners on their utility bills in the long run.
So, if you have made these improvements or purchases or plan to, now is a great time to replace your HVAC system. Call Climate Control today for more details. To find out how to apply for the tax credit, click here.