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Heating and Air Conditioning Tax Credit

Having problems with an outdated heating and cooling system? Considering an upgrade to a more energy-efficient one? Act now and you could be eligible for a federal heating and air conditioning tax credit up to $1,500.

How You Can Save by Upgrading to an Energy Efficient Heating & Air Conditioning System

Depending on the age and efficiency of your current heating and cooling system, upgrading to a more energy-efficient one could bring tremendous savings on electric bills. So much so that the cost of replacement could quickly be recovered even without the tax credit.

But if you are planning to replace your outdated or non-working system, be aware of the heating and air conditioning tax credit and what is required to take advantage of it. It may be an added bonus.

About the Heating and Air Conditioning Tax Credit

The economic stimulus bill signed into law in 2009 revised the heating and air conditioning tax credit made available in 2008. The amount of credit homeowners can take rose from 10 to 30 percent of the replacement cost, including installation. The tax credit limit for energy-efficient improvements also increased, from $500 to $1,500 for a two-year period.

However, energy efficiency requirements rose as well. Just because a new system is rated Energy Star doesn’t ensure it’s eligible for a heating and air conditioning tax credit. You’ll need certification from the manufacturer that your system meets the level of energy efficiency required to take the tax credit.

Who is Eligible for the Tax Credit?

To be eligible for the heating and air conditioning tax credit, the following must be met:

  • The HVAC system must be for an existing home.
  • You must be the homeowner.
  • The home must be your principal residence and located in the U.S.
  • Energy-efficient improvements must be made between January 1, 2009 and December 31, 2010
  • You must purchase qualified, energy-efficient products.

While the law doesn’t require you purchase a central air conditioner and furnace together, you may need both to meet the energy efficiency required to take the heating and air conditioning tax credit. Plus, both your AC and furnace must be made and tested by the same manufacturer.

Your HVAC contractor can explain the details and help determine if your new system could be eligible for a tax credit. You can also get additional information from the Tax Incentives Assistance Project.