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

New Air Conditioning Installation Pictures

As promised, here are some before and after pictures of the new system installation at my home that I spoke about in an earlier post.  To recap, we chose to replace our 10 year old Rheem system with a new High Efficiency Comfortmaker 15 SEER heat pump.  For more about the benefits we have experienced with our new system, read this post.

4 Common Home Improvement Misconceptions

If The Better Business Bureau Doesn’t Have Any Complaints Against The Contractor, He Must Be Qualified.

This is a common and often costly misconception. In fact, just because a contractor doesn’t have any complaints with the BBB, does not mean you’re working with someone who is a reputable professional. You need to investigate the company further. Many contractors, though they have no BBB complaints, do not do a satisfactory job (much less, a superior job). To ensure you’re dealing with a reputable professional, use the BBB as a starting place, not the only place.

Also keep in mind, the BBB is not a government agency and it does not keep a record on every contractor in town. There are several very reputable contractors the BBB has no record of at all. To truly gain perspective on a contractor’s credibility, research beyond the BBB.

Going With The Lowest Price Saves You Money.

NO, not necessarily! Everyone tends to look for the lowest price. On a low estimate, you must ask yourself what is being left out or what shortcut is being taken. Let me explain…

One roofer had his re-roof job $300 cheaper than anyone else. The homeowner wanted to save money and accepted his proposal. After the job was completed, the old shingles and nails were still lying around the yard and the homeowner was upset. The contractor told them that he had not figured the clean-up in his proposal and that was why he could do the job so much cheaper than anyone else could.  When comparing quotes for a new air conditioning system for you home, make sure they are comparable in equipment brand, size, features, accessories, and warranties.

One of the most common signs of trouble ahead is someone offering to do work for much less money than others. Like anything else, you can’t get something for nothing. Be careful of choosing your contractor based upon the lowest price.

Doing It Yourself Saves Money.

Sometimes the “weekend warrior” can undertake small projects like painting, hanging wallpaper, routine repairs, etc. But beware of undertaking larger, more complicated projects. What starts out as an attempt to save money can turn into a costly mess. All too often, the job is botched and it costs more to have a reputable professional come in and fix what’s been done. According to an article in the Baltimore Sun, less than 20% of these do-it-yourself jobs work out - mostly due to lack of experience on the part of the homeowner. If you want to be assured your project will turn out the way you want it, call an experienced, reputable professional.

If A Person Claims To Have Many Years Of Experience, They Must Do Quality Work.

I can’t tell you how many people receive bad workmanship from contractors who’ve claimed to be in business or the trade for twenty years. Take experience claims with a grain of salt. Just because a contractor claims to have twenty years experience, does not mean you’ll get what you want. He could have done a poor job for twenty years. Remember that technology is always improving and when it comes to air conditioning and heating equipment, ongoing education about new equipment concepts and energy saving technology is key.  Investigate further to ensure you’re dealing with a qualified professional that is dedicated to continuing education in their field of expertise.

Finding the Right HVAC Contractor - 10 Questions to Ask

Hiring an air conditioning or heating contractor can be intimidating.  After all, replacing your central air conditioning system can be one of the most expensive home improvement projects.  Below are 10 common and necessary questions to ask your potential air conditioning contractor:

Are you licensed? Make sure your HVAC contractor is properly licensed.  In the State of Florida, all contractors MUST be either certified by the State (if they have a statewide license), or registered with the State (if they have a countywide license).  Anyone can say they are licensed.  Make the contractor prove it by either showing you the license or giving you a copy of it.  If you have any questions or doubts, call the Florida Department of Business and Professional Regulation, or the County Construction Industry licensing board.

Do you carry general liability insurance? Make sure your contractor carries general liability insurance.  This type of insurance protects your property in case of damage caused by the contractor and/or his employees.  The insurance company will pay for the cost of replacing and/or repairing any damage that occurs.

Do you carry workers’ compensation insurance? Make sure your contractor carries workers’ compensation insurance.  It protects you from liability if a worker is injured while on your property.  Be aware that if the contractor doesn’t carry workers’ compensation coverage, you may be liable for any injuries suffered by the contractor or any of his employees on your property.

Are you a member of a professional organization? Organizations include ACCA (Air Conditioning Contractors of America) and NATE (North American Technician Excellence).  In most cases, professional organizations only attract conscientious contractors interested in bettering the industry and in weeding out unprofessional contractors.  In order to become a member, the contractor’s background and references are thoroughly investigated.

Will you pull all the required building permits? Make sure your HVAC contractor pulls all required permits.  This is very important.  When a contractor pulls the required permits, you know things will be done to “code”.

Do you guarantee your work? Your contractor should guarantee his work for at least one year from date of completion.  Some contractors guarantee their work for two or even three years.

Who will be in charge of the job? Make sure you know who to expect on the job whenever work is being performed - especially if sub-contractors will be used.

Will you provide me with written references or testimonials? A good contractor will be happy to provide you with references.  You should look for a well-established contractor who can give you several client  references from the last 6 months to one year.

What percentage of your business is repeat or referral business? When a significant source of a contractor’s business is derived from repeat and referral business, it usually indicates that his clients are pleased with the work they’ve received.

How do you handle “dirty work”? Make sure the HVAC contractor will make an honest effort to keep debris and dust contained, or notify you when the heavy debris generating operations will take place so you can place sheets over furniture or move sensitive belongings.  Make sure the contractor agrees to clean up and place all debris in a predetermined place or refuse container upon completion.< >< ><–>