HVAC Tax Credits in 2009 Stimulus

We have recently received many questions regarding the new HVAC Tax Credits in the Stimulus Package. To best explain the credits, we have pulled information from a variety of resources including EnergyStar.gov and the ACCA.  Below is a generalized summary of the tax credits.  Please keep in mind that the tax credits are for qualifying equipment only.  It is best to seek advice from your HVAC professional and tax professional regarding specific requirements and qualifying heating and cooling equipment.

For qualified improvements, homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500) provided the following criteria are met:

• must be “placed in service” from January 1, 2009 through December 31, 2010
• must be for taxpayer’s principal residence, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, and small wind energy systems (where second homes qualify)
• $1,500 is the maximum total amount that can be claimed for all products placed in service in 2009 & 2010 for most home improvements, EXCEPT for geothermal heat pumps, solar water heaters, solar panels, fuel cells, and small wind energy systems which are not subject to this cap, and are in effect through 2016
• must have a Manufacturer Certification Statement to qualify
• for record keeping, save your receipts and the Manufacturer Certification Statement
• improvements made in 2009 will be claimed on your 2009 taxes (filed by April 15, 2010) — use IRS Tax Form 5695 (2009 version) — it will be available late 2009 or early 2010
• If you are building a new home, you can qualify for the tax credit for geothermal heat pumps, photovoltaics, solar water heaters, small wind energy systems and fuel cells, but not the tax credits for windows, doors, insulation, roofs, HVAC, or non-solar water heaters.
  
• The new tax credits are retroactive to January 1, 2009, and expire on December 31, 2010. The $1,500 limit is for all improvements made during the two year term, not $1,500 each year.
• Homeowners may use the entire $1,500 tax credit limit on a single qualifying improvement.  The tax credit applies to the installed costs of the qualified equipment, which includes labor.  If 30% of the installed cost equals less than $1500, the homeowner can “bank” the remaining credit for additional improvements.
• The previous lifetime caps which limited the homeowner to $150 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump have been removed.  Any previous claims do not count against the current $1500 tax credit limit and homeowners that previously claimed tax credits in 2006 or 2007 are eligible for the full $1,500 limit