Did you know that if you install a high efficiency furnace, heat pump, air conditioner, or water heater before the end of the year you are eligible for a tax credit? That’s right. The federal government, in an effort to encourage homeowners to make their homes more energy efficient, is offering tax credits for installing furnaces, air conditioners, and water heaters.
You Must Purchase Before the End of the Year to Qualify
If you purchase energy efficient equipment before the end of 2013, the credit is equal to the full cost of the equipment up to the following caps:
- Advanced main air circulating fan: $50
- 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 which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Central air conditioner which achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
- Natural gas, propane, or oil water heater which has either an energy factor of at least 0.82 or a thermal efficiency of at least 90 percent: $300
- 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”: $300
Timeline for Tax Credits for Installing Energy Efficient Equipment
These tax credits for energy improvements all started in 2005 with the Energy Policy Act of 2005. Here is a history of the tax credits since 2005:
- 2005 – The Energy Policy Act of 2005 offered tax credits for energy improvements to existing homes. The credit was limited to purchases made in 2006 and 2007 with a cap of $500 for all purchases made in those two years.
- 2008 – Then, the Energy Improvement and Extension Act of 2008 re-established the credit for 2009 and 2010 with a cap of $1,500.
- 2010 – The credit was again renewed in 2010 for 2011, but reduced to a $500 cap. This tax credit expired at the end of 2011.
- 2012 – The American Taxpayer Relief Act of 2012 retroactively renewed this tax credit effective January 1, 2012, expiring again on December 31, 2013. Any qualified equipment installed in 2012 or 2013 is eligible for this credit. As in previous years, the cumulative maximum amount of tax credit that can be claimed by a taxpayer in all years combined is $500. If you have already claimed a tax credit of $500 for any purchases made in any previous year, you are not eligible for additional tax credits. But if you haven’t claimed $500, give us a call and let Home Comfort Experts install your AC, furnace, or water heater before the end of the year to save you big!