New air conditioning systems save money and cool wonderfully, but installation of a new energy-efficient system may qualify a business owner or homeowner for special tax credits from the federal government. The Energy Improvement and Extension Act of 2008 created tax credits for items like geothermal heat pumps, and the act was expanded in 2009 with the American Recovery and Reinvestment Act.
Device Eligibility and Tax Breaks
The tax credits granted through these government acts stem from ratings devised by the federal government’s ENERGY STAR program. For the 2012 and 2013 tax years, a tax credit of up to 10 percent of the cost, or $500, is available when a current owner upgrades any one of many devices in the home.
Eligible devices and systems include AC installation or heating and ventilation changes, improved roofing, and better water heaters. One of the important things to remember about this tax credit is that these devices must be installed into a principal residence and may not be part of new construction or a rental unit.
Alternatively, some devices qualify for a higher tax credit and don’t carry the restriction of being a principal residence. Second homes will qualify. However, rental units are still not covered under these more impressive credits. Some devices that are eligible for tax credits of 30 percent of the price with no limit on the total cost include geothermal heat pumps, residential wind turbines and solar energy installations.
Significant Energy and Cost Savings
One reason to speak with a residential or commercial HVAC services specialist is the truly significant amount of energy savings that comes with newer machines. Numbers suggest that the average business spends about 40 percent of its energy budget on heating and cooling. An old and inefficient HVAC system could represent a huge drain on company.
Getting the Tax Break
New AC installation isn’t all that needs to be done to ensure a tax credit is available at the end of the year. The first step to getting a tax credit is deciding on what to upgrade and which new machinery to use. A commercial HVAC services company can recommend tax rebate eligible systems. Before agreeing to installation, a property owner must confirm tax credit eligibility.
Additionally, all the receipts from the transaction and installation must be kept. It may also prove beneficial to hang onto the Manufacturer’s Certification Statement. The certification statement is a document the manufacturer signs that certifies a new air conditioner will qualify for a tax credit. This document isn’t necessary to get the credit. However, it may be helpful to keep with the company’s files.
When tax time rolls around, the form the IRS requires for residential owners is Form 5695. Additionally, commercial property owners will want to investigate the guidelines offered by the U.S. Environmental Protection Agency through its ENERGY STAR program.
Property owners with aging HVAC systems should consider upgrading to new efficient models. Installing new HVAC equipment in commercial or residential settings is an excellent idea because of the future savings in energy costs as well as the potential tax breaks granted by installing new, efficient machines. Businesses and homeowners also help protect the environment by installing equipment that doesn’t use as many of the Earth’s resources.