Tax Credit Can Help You Make Up Your Mind

Posted on October 16, 2016

So, you have realized your home’s old home comfort system needs to be replaced with a new, more efficient system. You are also considering using your income tax return to help pay for it. But, you’re still not quite sure if you are ready to make the move. Fortunately, legislation passed in December may help you not only make the call but provide financial help to purchase a new system.

The Residential Energy Efficiency Tax Credit was renewed, retroactively from January 1, 2015 through December 31, 2016. The tax credit could prove valuable for homeowners who want to use their refunds to finance a new HVAC system. Qualified equipment installed in 2015 or 2016 is eligible for this credit.

Qualification requirements and details of the tax credit as detailed at include:

  • 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

Homeowners that utilize the tax credit towards the purchase of a new system will also enjoy the benefits of replacing their system now instead of waiting for a breakdown. This preventative approach is a smart move because it helps avoid costly repairs which may only be a temporary fix. Also, a new system is more efficient, saving homeowners on their utility bills in the long run.

If you plan on using your income tax return and the tax credit to help with a new system purchase, call The General today for more details. To find out how to apply for the tax credit, click here.

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