Energy Efficiency Federal Tax Credits
Common Questions Regarding Tax Credits for Home Heating and Cooling equipment.
The American Recovery and Reinvestment Act of 2009 includes valuable non-refundable tax credits for homeowners who purchase qualified high efficient heating and cooling products. The provisions of this law allow homeowners to recoup up to 30% ($1500 maximum) of the installed cost. This possible reduction of tax liability is outlined under Section 25C of the internal Revenue Code. Please consult with a tax professional to find out how these tax credits apply to your specific situation and to gain the most benefit from them.
What is a non-refundable tax credit?
In general tax credits are used to reduced your federal income tax liability. Non-refundable tax credits can only reduce this liability to zero, but not below. In other words, they cannot result in a refund but you may be able to carry a balance forward into future tax years.
How do homeowners claim the tax credit?
It is strongly recommended that homeowners consult a tax professional to understand how this tax credit applies to their unique situation. Taxpayers should keep copies of invoices and receipts for qualified projects and obtain the Manufacturer Certification Statements pertaining to the specific product models purchased and installed. The tax credit is applied for using IRS Form 5695 in combination with their 2009 or 2010 tax returns.
Are there other restrictions that a homeowner should be aware of?
Yes. This tax credit applies only to project performed on the principal residence of the taxpayer. It must be owned by the taxpayer and be a residential single family dwelling.
What are the time limits for this tax credit?
Qualified home heating and cooling equipment must be installed and operating between January 1, 2009 and December 31, 2010.
Can a homeowner claim a tax credit of $1500 in 2009 and then again in 2010?
No. Homeowners are eligible for a maximum of $1500 tax credit for 2009 and 2010 combined, not for each year individually. Similarly, the $1500 maximum is for all qualified projects combined, not for each project individually.
What are the requirements for home heating and cooling equipment to qualify for the tax credit?
For this information go to: energystar.gov/taxcredits
Here is a snapshot of what qualifies for HVAC equipment according to the Federal Government:
How Do I know if my equipment qualifies for the tax credit?
Manufacturers must provide Certification Statements for their products that meet the requirements for the tax credit. Below we have provided links to the manufacturers websites where you can download this certificate for your specific system or piece of equipment and print it out.
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