On February 17,2009 President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. The legislation combines spending and tax incentives designed to get the American economy moving again by investing in our nation’s road and energy infrastructure, and providing incentives for increasing the energy efficiency and performance of America’s homes and commercial buildings. These are general guidelines only and may not be applicable in all circumstances. Taxpayers are encouraged to consult with a tax professional.
Residential Tax Credit Details
Greater Tax Credit
For qualified improvements (see table below), homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500.).
Longer Term
The new tax credits are retroactive to 1/1/2009 and expire on 12/31/2010. The $1,500 limit is for all improvements made during the two year term, not $1,500 each year.
Per-Appliance Caps Removed
Subject to the 30% of installed cost limitation, homeowners may use the entire $1,500 tax credit limit on a single qualifying improvement. The previous per-appliance caps that limited the homeowner to just $150 or $300 has been removed.
Lifetime Limit Removed
Homeowners that previously claimed tax credits in 2006 or 2007 are eligible for the full $1,500 limit.
ACWholesalers List of Qualified Units
Here is the link to the qualified units and their corresponding certificates needed for tax purposes.
______________________________________________________________
Frequently Asked Questions about the New Tax Credits
1.Can the homeowner claim $1,500 in tax credits for improvements made in 2009 and again for improvements made in 2010?
Answer: No. Taxpayers will be eligible only for a total of $1,500 in tax credits for qualifying improvements made in the combined two year period of 2009 and 2010.
2. Can the homeowner use the entire $1,500 limit as a credit toward the installation of one appliance?
Answer: Yes. A homeowner may use the entire $1,500 in tax credits for installing a single appliance, such as a qualified furnace, air conditioner, or heat pump system as long as the total cost of the appliance is $5,000 or more. The legislation limits the tax credit to 30% of the total cost of the appliance with a $1,500 cap.
3. What happens if the 30% of the installed costs is less than $1,500?
Answer: The homeowner can use the remaining available tax credit for other qualified improvements in 2009 or 2010. Any single installation of a qualifying appliance that costs less than $5,000 will allow the homeowner to invest in additional energy saving appliances or upgrades and still receive a tax credit ( up to a $1,500 combined maximum).
4. Does the tax credit apply to the cost of the equipment or equipment plus labor?
Answer: The tax credit applies to the installed cost of the qualified equipment, which includes labor.
5. Do any manufacturers offer a full line of air conditioners and coils that meet the tax credit guidelines?
Answer: According the AHRI directory, no HVAC manufacturer has a full line of split system air conditioner / coils / variable speed furnaces that meet the tax credit guidelines of 16 SEER and 13 EER. However several manufacturers have full product lines that meet the tax credit guidelines with 3rd party coils.
6.Do I have a Goodman System that qualifies for the tax credits?
Answer: Please consult with the AHRI directory for complete information about qualifying systems. The AHRI directory is also located on the internet at the following address: http://www.aridirectory.org
7. Does a 95% AFUE furnace plus a 13 SEER split outdoor air conditioning system qualify for a tax credit?
Answer: Yes, but only a portion of the installed cost associated with the 95% furnace (both the equipment and labor). So if the installed cost of the 95% furnace is over $5,000 then the homeowner will qualify for the full tax credit. If the installed cost of the 95% furnace is less than $5,000, then the homeowner will qualify for a tax credit that is equal to 30% of the installed cost.
8. Does a system that otherwise doesn’t meet the efficiency requirements, but has a furnace with an “advanced circulating fan” qualify for the tax credit?
Answer: The advanced circulating fan should qualify for a tax credit, but how the cost of the fan is broken down is not certain at this time. The chart of qualifying HVAC from the Energy Star website, which included below, includes advanced circulating fans as qualifying for the 30% up to $1,500 tax credit. However, there is also a statement on the Energy Star website indicating that the IRS is looking at this question and will issue a clarifying rule. Please check the Energy Star website at http://energystar.gov/
9. How will a taxpayer claim the credit and receive their money?
Answer: The tax credit applies as a direct reduction of taxes owed. In the past, the IRS has directed taxpayers to use Form 5695, Residential Energy Efficient Property Credit. It is expected that the IRS will produce new rules related to recently enacted stimulus legislation giving taxpayers further guidance on claiming tax credits.
10.Where can homeowners find a manufacturer’s Tax Credit certification statement?
Answer: Certification statements for Goodman systems are posted at the following internet address http://www.goodmanmfg.com.
11. Where can a homeowner find a complete list of qualifying systems?
Answer: AHRI internet website located at: http://www.ahrinet.org.
12.What is the difference between tax credit and a tax deduction?
Answer: A tax credit applies against the taxpayer’s obligation for taxes. A tax deduction applies against a taxpayer’s income, lowering the adjusted gross income. Tax credits have a greater benefit to a taxpayer. For example, if the taxpayer owes $2,000 in taxes, a $1,500 tax credit reduces the obligation to $500.00.
13.What if the homeowner already claimed $500 in tax credits in 2006 or 2007?
Answer: The “lifetime caps” that used to be in place have been removed. Previous claims do not count again the current $1,500 tax credit limit.
14.Can a homeowner claim the credit for improvements to a second home?
Answer: No. The tax credit is available for the taxpayer’s primary residence only.
The Following chart is an excerpt as of March 18, 2009 from the Energy Star website.
| Product Category |
Product Type |
Tax Credit Specification |
Tax Credit |
Notes |
| HVAC |
Central A/C |
Split Systems:
EER >=13
SEER >= 16
Package systems:
EER >= 12
SEER >= 14 |
30% of cost, up to $1,5002 |
For a list of qualified products, go to the Consortium for Energy Efficiency product directory, click on Air Conditioners, then in the “CEE Tier” enter “Residential Advanced Tier 3” for CAC Split Systems, and "Residential Tier 2" for CAC Package Systems and ASHPs.
Note — not all ENERGY STAR products will qualify for the tax credit. |
| Air Source Heat Pumps |
Split Systems:
HSPF >= 8.5
EER >= 12.5
SEER >= 15
Package systems:
HSPF >= 8
EER >= 12
SEER >= 14 |
30% of cost, up to $1,5002 |
| Natural Gas or Propane Furnace |
AFUE >= 95 |
30% of cost, up to $1,5002 |
For a list of qualifying products go to the Gas Appliance Manufacturing Association
Not all ENERGY STAR products will qualify for the tax credit. View ENERGY STAR criteria. |
| Oil Furnace |
AFUE >= 90 |
30% of cost, up to $1,5002 |
| Gas, Propane, or Oil Hot Water Boiler |
AFUE >= 90 |
30% of cost, up to $1,5002 |
| Advanced Main Air Circulating Fan |
No more than 2% of furnace total energy use |
30% of cost, up to $1,5002 |
- |
|
