TAX CREDITS ARE AVAILABLE FOR 2016 AND RETROACTIVE TO JANUARY 1, 2014.
YOUR AIR CONDITIONING AND HEAT PUMP SYSTEM PURCHASE COULD GET YOU UP TO $300 IN FEDERAL TAX CREDITS
products. Tax credits, unlike deductions, are subtracted directly from your personal income tax liability. For
example, if you complete your tax return and calculate that your tax liability is $2,000, a tax credit of $300 may
reduce your tax liability to only $1,700.
Be sure to check with your tax adviser to determine eligibility for and how to best take advantage of the tax credits.
HERE’S HOW IT WORKS
A tax credit is subtracted from the amount of tax that you owe. Credits are claimed when you file taxes for the previous year, so if you made a purchase in 2014, you would be claiming your tax credit now when you file your taxes.
Previously, many of the energy efficiency tax credits expired at the end of 2013. However, the Tax Increase Prevention Act of 2014 extended many of the credits through December 31, 2014. So if you made any of the following purchases in 2014, you are eligible for a tax credit:
Heating, venting, air conditioning, including:
- Advanced main air circulating fan
- Air-source heat pump
- Central air conditioning
- Gas, propane, or oil hot water boiler
- Natural gas, propane, or oil furnace
- Roofs (metal and asphalt)
- Water heaters (non-solar)
- Windows and doors
Product purchase must be for your principal residence and be “placed in service” between January 1, 2014 and
December 31, 2016. According to the IRS “placed in service” means when the original installation of the product
- System components must meet efficiency levels set by the Federal government. Note that NOT all ENERGY STAR® qualified products are eligible.
- Visit ENERGY STAR for the exact requirements for each of the products listed above.
Product Type Efficiency Requirements Maximum Tax Credit Available
- Gas & Oil Furnaces and Boilers 95% AFUE $150
- Air Conditioners 16 SEER / 13 EER $300
- Heat Pumps 15 SEER / 12.5 EER / 8.5 HSPF $300
- Packaged Air Conditioners 14 SEER / 12 EER $300
- Packaged Heat Pumps 14 SEER / 12 EER / 8 HSPF $300
- Advanced Main Air Circulating Fan $50
Geothermal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .(see below)
- Claims cannot exceed the cumulative limit of $300 for all tax credits claimed for the years 2006 through 2013 (Section 25C of the tax code). So if you’ve made other home improvements qualifying for tax credits under the previous Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, the American Recovery and Reinvestment Act of 2009 or the Energy Policy Act of 2005 which made credits available in 2006 and you’ve already received tax credits of $500 or more, you will not qualify.
- You will need to file IRS form 5695 with your tax return. You will also be required to have proof in the form of a signed statement from the manufacturer certifying the product qualifies, which can be obtained from your installing dealer. This should be kept in case of future audit but does not have to be submitted with the return.
GEOTHERMAL TAX CREDITS
The current geothermal tax credits are unaffected by these changes and remain in place as is through 12/31/2016.
Geothermal heat pumps placed in service starting in 2009 are eligible for a tax credit equal to 30 percent of their installed cost, with no maximum.
To be eligible for the tax credit, it must meet these ENERGY STAR criteria:
- Closed-loop, water-to-air system: 17.1 EER and a minimum 3.6 COP
- Open-loop, water-to-air system: 21.1 EER and a minimum 4.1 COP
- Closed-loop, water-to-water system: 16.1 EER and a minimum 3.1 COP
- Open-loop, water-to-water system: 20.1 EER and a minimum 3.5 COP
FOR MORE INFORMATION
You can find more information at http://www.irs.gov/.
Note: this bulletin is for discussion purposes only and is general in nature. This is not to be considered tax nor
legal advice. See your tax professional to determine how these credits would apply in your circumstance.
For a FREE consultation on energy-efficient heating and cooling equipment for your home, call today to start saving now 1-866-999-2665