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Energy Tax Credits on HVAC Systems Extended through 2013

Due to the extension of federal legislation at the beginning of 2013, homeowners are still eligible for tax credits if they make purchases on qualifying HVAC (heating, ventilation and air-conditioning) systems. The legislation has extended the highly popular incentives as a way to improve home and commercial building energy-use efficiency all across America.

Products That Qualify

The federal government set up specific guidelines on exactly which types of air-conditioning products qualify to receive the federal tax credit. The types of equipment that qualify are high-efficiency oil, gas or propane boilers and furnaces along with high-efficiency central A/C units that include a heat pump air source. Many biomass stoves, along with geothermal or ground source heat pumps also qualify.

High-efficiency fans for cooling and heating systems along with water heaters are also included in the list of products that qualify for the consumer tax incentives. For HVAC units, these include:

  • Split System Air Conditioning Systems – All split system air conditioning systems that are rated 16 SEER/13 EER can receive the tax credit, although energy efficiency must be met on both levels. The SEER rating represents the Seasonal Energy Efficiency Ratio.
  • Split System Heat Pump Systems – All heat pump split systems rated 15 SEER/12.5 EER/8 HSPF qualify to receive the new federal tax credit.
  • Package Air-Conditioning Systems – All A/C systems with dual fuel products or heat pump with a rating of 14 SEER/12 EER/8 HSPF qualify.
  • Gas Furnaces – All gas furnaces rated 95% AFUE qualify.

The Qualifying Taxpayer

Because this is an extension of the original tax incentives signed back in 2010, the IRS offers specific guidelines that all eligible equipment will be installed in homes currently occupied by the taxpayer. The home must be the principal or secondary residence of the taxpayer when the equipment is installed.

Replacing a Furnace or Air Handler

Taxpayers who have newly installed a central A/C air system will only be eligible to receive their tax credit if the air-moving device used to push cooled air into the home through the duct system is also replaced. Typically, the air movement is handled by the furnace or air handler in the home. Usually, most newly replaced furnaces that have an advanced main circulating fan will qualify with the new air conditioner. However, they will most likely need to be the same brand.

Lowering Installation Cost

Now is the best time to install a traditional or mini-split A/C system by using the tax credit and other financial incentives to offset the expense of installing the unit. Any HVAC equipment that is older than 10 years most likely is not keeping the home at a comfortable level. New units that have earned the ENERGY STAR rating can save homeowners upwards of 20% on their cooling and heating costs every month. With a lower initial cost of installation and a greater savings on monthly utility bills, homeowners can quickly recoup the reduced cost of purchasing a new HVAC unit.

A 10% Savings

The extension of the 25(c) residential tax credit provides the opportunity for eligible taxpayers to offset 10% of the installation cost of qualified heating and cooling equipment with specific caps. For most residential central air A/C units, and air-source heat pump systems, the tax credit has a cap of $300, with the lifetime credit cap for the total of qualifying products at $500.

With this being an extension of the original bill passed in 2010, expiring at the end of 2013, it is crucial to have the unit installed soon. Any taxpayer eager to make a modest improvement to increase the energy efficiency of their home should consider installing a qualifying HVAC system and maximize the energy tax credit offered by the Internal Revenue Service.

Berner AC & Heat can help you take a closer look at these potential tax savings today as we install new energy efficient AC systems throughout the metro New Orleans area.  Please call us today to setup a free consultation.