Tax Credits for New Air Conditioning and Heating Units, Up to $500!
We realize many of our costumers are in need to understand about the Tax Credit for installing more energy efficient air conditioning and heating units in their homes and offices. The American Recovery and Reinvestment Act of 2009, includes a tax credit available for homeowners that make their homes more energy efficient. High efficiency air conditioning and heating are one of those efficiency improvements. You can receive a credit of 30% of the cost up to a maximum credit of $500
A professional contractor like us, Air 4 Seasons Air Conditioning & Heating must install the air conditioning units.
There are certain energy efficiency requirements tied to the tax credit. Air conditioning systems must have a 16 SEER rating and a 13 SEER rating and/or 95% AFUE efficiency furnace. Not all equipment meets these requirements. The tax credit is good between January 2011 and December 2011. This tax credit is available even if you participated in prior energy efficiency programs (i.e. 2006 energy efficiency tax credit).
You should also be aware that the $500 limit applies to many types of energy efficient home improvements, including windows and doors, roofing shingles, and insulation. Therefore, you have to decide what improvement would make the largest impact for your homes efficiency. Yet even without the tax credit, the savings on your utility bill can be as much as 50% with new high efficiency equipment. In fact, in many cases your utility savings can pay the cost of the equipment installation.
We have included frequently asked questions about the program. However, you should consult with a professional to determine your specific situation.
Frequently Ask Questions About 2011 Federal Residential Energy Tax Credit
If I claimed $500 in tax credits in 2006 or 2007 under the previous tax credit program, am I still eligible?
Yes. The new law removes the lifetime caps so you are eligible.
When and how do I claim the tax credit?
Claiming the tax credit is easy you only need to file a simple IRS 5695 form with your tax return. Speak with your tax adviser. The manufacturer of the equipment will provide a certificate you should keep on file.
Can I claim $500 in tax credits for improvements made in 2010 and again for improvements made in 2011?
No. You can only claim a total of $500 in tax credits for improvements made in the combined two-year period of 2010 and 2011.
Can a homeowner use the entire $500 limit as a credit toward the installation of one appliance?
Yes. A homeowner may use the entire $500 in tax credits for installing a single appliance, such as a qualified furnace, air conditioner, heat pump, or hot water heater.
What happens if the 30% of the installed costs is less than $500?
The homeowner can “bank” the remaining available tax credit for other qualified improvements. Any single installation that costs more than $5000 will instantly reach the $500 limit.
Does the tax credit apply to the cost of the equipment or equipment plus labor?
The tax credit applies to the installed costs of the qualified equipment, which includes labor.
What’s the difference between a tax credit and a tax deduction?
As a tax credit applies against the taxpayers’ liability. A tax deduction applies against a taxpayer’s income, lowering the adjusted gross income and possibly moving the taxpayer to a lower tax bracket. Tax credits have a greater benefit to a taxpayer.
Can a homeowner claim the credit for improvements to a second home?
No. The tax credit is only available for improvement to the taxpayer’s primary residence.
Does the homeowner who lives in a modular home or mobile home qualify?
Yes. As long as the improvements meet the qualifying criteria and the homeowners' primary residence they may claim the tax credit.
What other types of energy efficiency improvements qualify for the tax credits?
Homeowners may be able to qualify for the tax credits if they make qualified improvements to windows and doors including skylights, storm windows and storm doors; roofing including metal and asphalt roofs; and insulation. All of these improvements qualify if they meet certain minimum standard, but homeowner may only claim $500 in total for any improvements.
Does a heat pump need to meet the minimum each of the minimums to qualify or just one?
Heat pumps must meet each of the minimum standards listed above to qualify for the tax credits.
Does this apply to equipment installed in new homes?
No. The tax credit can only be claimed by taxpayers for improvements to existing homes.
Does this replace the Department of Energy or Energy Star program?
These tax credits are from the same program, but it has been modified and expanded. The same program that allowed taxpayers to claim up to $500 in tax credit in 2006 and 2007, and part of 2009. The differences are the tax credit limit is higher and the per-appliance caps have been removed.
Do ductless mini-splits meeting the HSPF criteria qualify for the tax credit?
Yes, as long as they meet or exceed the minimum qualifications for split air-conditioners (16 SEER and 13 EER) or split heat pumps (8.5 HSPF, 15 SEER, and 12.5 EER).
What if the homeowner installs a furnace that meets the 95% AFUE standard but an central air conditioner below the standard? Can they still claim the full $500?
The homeowners can claim 30% of the final installation costs up to $500 associated specifically with the 95% AFUE furnace will qualify for the credit. Should the installation costs associated with the furnace not reach $5,000, 30% of the installation cost can still be claimed and the difference between that amount and the $500 cap can be applied to any other qualifying improvements.
So whenever you are ready to move on and replace your good, old HVAC unit, give us a call. if you need a second opinion or bid, give us a call. We have the most competitive prices in town along with the best service and equipment. (818) 378-6508 or Toll Free (888)99-AIR-LA
Thank you,
Victor & Zulema Rosales
This information was taken from the Air Conditioning Contractors of America.
►The consumer gets a Manufacturer’s Certification Statement which certifies that the product or component qualifies for the tax credit.
►This information is for discussion purposes only and is general in nature. This information is not intended to be or considered as tax advice. Please consult with your tax professional to determine how these credits would apply in your own circumstances.
