There’s good news that came out of the “fiscal cliff” agreement: Homeowners can now access a tax credit for a variety of high-efficiency heating and cooling equipment, and the credits are retroactive for 2012, too. Here’s how the tax credits work and what equipment qualifies.
The evolution of tax benefits
The agreement has made the tax credits from the American Tax Payer Relief Act active again. While those credits, called 25C tax credits, expired at the end of 2011, homeowners who installed qualified high-efficiency HVAC equipment in 2012, and those who install it in 2013, can now take advantage of a tax credit. The plan does not affect tax credits still in effect for alternative energy sources such as wind-turbine, solar or geothermal systems. These credits extend to the end of 2016.
To qualify, the equipment must be installed in a primary residence; however, the residence can be retrofitted with new equipment. The cap for the credits is set at $500, but homeowners can use that credit any way they’d like. Here’s how the qualifications break down for various types of equipment:
- Furnaces and boilers powered by oil, gas or propane with at least an Annual Fuel Utilization Efficiency (AFUE) of 95 percent qualify for $150.
- Central air conditioners with a Seasonal Energy Efficiency Ratio (SEER) 16 and an Energy Efficiency Ratio (EER) of 13 qualify for $300.
- Air-source heat pumps with a SEER 15, EER 12.5 and Heating Seasonal Performance Factor (HSPF) 8.5 are eligible for $300.
- Water heaters powered by oil, gas or propane with an Energy Factor (EF) rating of 0.82, or an electricity-powered heat pump water heater with a 2.0 EF qualify for $300.
- Advanced main air circulating fans that consume 2 percent or less of the HVAC system’s energy consumption are eligible for $5.
There’s more good news. Homeowners can also apply the credits toward improving the home’s efficiency. Qualifying equipment includes:
- Storm windows
- Exterior doors
If you missed out on tax credits in years past, don’t let them pass you by in 2013. For expert advice regarding tax credits, contact Apollo Home Heating, Cooling and Plumbing today! We’ve served homeowners in greater Cincinnati since 1910.
Image via Shutterstock.com