Questions About HVAC Tax Credits

Are the tax credits different for geothermal heat pumps?

Yes, homeowners who install geothermal heat pump systems may be able to claim up to 30% of the installed costs in tax credits in the year the system is placed into service.  However, there is no dollar limit to the credit on geothermal heat pumps. The geothermal tax credit also has a longer term, from January 1, 2009 and expires December 31, 2016.

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Can I claim the credit for improvements to a second home?

No. The tax credit is only available for improvement to the taxpayer’s primary residence.

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Can I use the entire $500 tax credit on a single qualifying home improvement?

Yes. Previous per-appliance caps that limited homeowners to just $150 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump have been removed.

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Can modular or mobile homeowners qualify?

Yes.  As long as the improvements meet the qualifying criteria and the homeowner’s primary residence they may claim the tax credit.

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Does the tax credit apply to the cost of the equipment or equipment plus labor?

The credit applies to the installed costs of the qualified equipment, which includes labor.

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How do I claim the credit?

The IRS has directed taxpayers to use Form 5695 to claim the credit. Taxpayers are also instructed to keep complete records of their installation and home improvements.

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How do I know which specific equipment or improvements qualify for the tax credits?

There are a wide range of products available that qualify for the full tax credits.  Schedule an online appointment for a FREE consultation with Service Experts Heating & Air Conditioning to review all available options or call us now to schedule.

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What is the amount of the HVAC Tax Credit?

For the qualified home improvements, homeowners may be able to claim tax credits equal to 30% of the installed costs, up to a total of $500.

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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.

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What if I install a furnace that meets the 95% AFUE standard, but with a central air conditioner below the standard? Can I still claim the full $1,500?

Homeowners can claim 30% of the final installation costs up to $500 associated specifically with the 95% AFUE furnace.  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.

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What if I previously claimed tax credits?

Homeowners that previously claimed tax credits are eligible to claim the full $500 limit for the current year.

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What is the time frame for the new tax credits?

The $500 limit is for all improvements made during the current year (2011).

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What’s the difference between a tax credit and a tax deduction?

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.

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