2011 HVAC Tax Credits

What if you could make home improvements that increase your comfort, lower your energy costs, add value to your home, and do something good for the environment? And what if you could get some money back from Uncle Sam at the same time?

A professional contractor who belongs to the Air Conditioning Contractors of America (ACCA) can show you how.

Updated Tax Incentives for Homeowners

Part of the tax extender bill passed by Congress in December 2010 made significant changes to tax incentives for federal taxpayers who install qualified energy efficient retrofits in their home, including higher efficiency heating, ventilation, and air conditioning (HVAC) equipment in their primary residences. An eligible taxpayer may claim up to $500 in tax credits, subject to caps based on the type of equipment installed.

You may now qualify for tax credits equal to 10% of the costs (up to a $300 limit) for installing a high efficiency central air conditioner, heat pump, or hot water heater. You may also qualify for tax credits equal to 10% of the costs (up to $150 limit) for installing a qualified furnace or hot water boiler. A smaller tax credit of 10% of the installed costs (up to $50 limit) is available for installing a system with an advanced main air circulating fan.

But you have to hurry because these tax credits are only available for improvements made in 2011. Not taking advantage of this incentive just leaves money on the table.

What Is Considered a High Efficiency Unit?

A split system central air conditioner must meet or exceed 16 SEER and 13 EER; package system central air conditioners must meet or exceed 14 SEER and 12 EER.

An air source heat pump must meet or exceed 15 SEER and 12.5 EER and 8.5 HSPF, in order to qualify for the tax credit. Package heat pump systems must meet or exceed 14 SEER and 12 SEER and 8 HSPF.

Natural gas furnaces, propane furnaces, natural gas hot water boilers, propane hot water boilers, oil furnaces, and oil hot water boilers all must meet or exceed 95% AFUE.

For the advanced main air circulating fan credit, the fan must use no more than 2% of the furnace's total energy. If the fan is qualified, but the furnace is not, you will not be able to take 10% off the cost of the entire furnace. Ask your HVAC contractor to break out the cost of the fan in your bill. You can get a 10% tax credit on the cost of the fan alone. If the furnace is qualified, but the fan is not, you can still take the 10% tax credit on the full cost of the furnace.

If I claimed more than $500 in tax credits under the previous tax credit programs, am I still eligible?

No. The new law reinstates the lifetime tax credit limits, which disqualify any homeowner who has claimed more than $500 in 25c tax credits since January 1, 2005, from any further credits.

Why You Should Consider an Upgrade

Advances in technology over the last ten years mean that today's higher efficiency HVAC equipment uses less energy, runs more quietly, and provides improved indoor air quality and comfort. And by using less energy and improved refrigerants, your new HVAC equipment is better for the environment.

Most homeowners would like to reduce their energy bills with higher efficiency HVAC equipment, and these tax credit help make the initial investment more affordable.

Talk to your ACCA contractor about finding the right qualified equipment that meets your budget. They can show you how much energy (and money) you could save over the long term.

Note: Every taxpayer's situation is different. We can't guarantee eligibility for the tax credits. But your ACCA member contractor can help you figure out what equipment qualifies and how it can work for your comfort, health, and pocketbook.