The Tax Credit is 30% of the installed cost of any 1 (one) or more products (listed below) for a total credit up to $1,500.00. Effective for a 2 year period retroactive to January 1, 2009 to December 31, 2010. It is not $1,500.00 per year, but a total of $1,500.00 in that two year period.
Must be expected to last 5 years OR have a 2 year warranty
Its purpose must be to insulate (i.e. insulated siding would not qualify)
Water Heaters: Rinnai Tankless Gas Water Heaters
Requires an Energy Factor >= 0.82 or a Thermal Efficiency of at least 90%
All ENERGY STAR gas tankless water heaters will qualify
Glossary For Above Terms
AFUE - This is a percentage measurement of a furnace’s heating efficiency. The U.S. Government’s minimum efficiency level is 78%. The higher the AFUE value, the more efficient the furnace. The initials stand for Annual Fuel Utilization Efficiency.
EER Rating- This term refers to the energy efficiency ratio. The EER measures cooling system performance at 95ºF. It measures performance on “peak days”—the hottest days, when your air conditioner is working hardest. A higher EER means you’ll get more cooling output for every unit of power input.
SEER Rating- This term refers to the season energy efficiency ratio. A higher SEER means better efficiency and lower energy bills. SEER is calculated by dividing the amount of cooling supplied by the air conditioner or heat pump (Btu’s per hour) by the power (watts) used by the cooling equipment under a specific set of seasonal conditions.
IECC - International Energy Conservation Code (IECC for short). The IECC includes insulation levels for attics, walls, floors, and basements. However, to qualify for the Federal tax credit, homeowners must only meet the level of insulation required for the area they are insulating. For example, a homeowner can choose only to insulate their attic to the levels required in the IECC and still be eligible for the tax credit. For most homeowners, this will mean adding an additional R-19 to R-30 insulation to their attic. If a homeowner insulates part of their home to a level below the IECC, this would not qualify.
Frequently Asked Questions
Q: Can the homeowner claim $1,500 in tax credits for improvements made in 2009 and again for improvements made in 2010?
A: No. Taxpayers may only be eligible for a total of $1,500 in tax credits for improvements made in the combined two year period of 2009 and 2010.
Q: Can a homeowner use the entire $1,500 limit as a credit toward the installation of one appliance?
A: Yes. A homeowner may use the entire $1,500 in tax credits for installing a single appliance, such as a qualified furnace, air conditioner, heat pump, or hot water heater.
Q: What happens if the 30% of the installed costs is less than $1,500?
A: The homeowner can “bank” the remaining available tax credit for other qualified improvements. Any single installation that costs more than $5000 will instantly reach the $1,500 limit.
Q: Does the tax credit apply to the cost of the equipment or equipment plus labor?
A: The tax credit applies to the installed costs of the qualified equipment, which includes labor.
Q: How will a taxpayer claim the credit and receive their money?
A: In the past, the IRS has directed taxpayers to use Form 5695, Residential Energy Efficient Property Credit. Taxpayers are not required to file anything more than the form, but are instructed to keep records of their installation.
Q: What is the difference between a tax credit and a tax deduction?
A: As a tax credit applies against the taxpayers’ liability. A tax deduction applies against a taxpayer’s income, lowering the adjusted gross income and possibly moving the taxpayer to a lower tax bracket. Tax credits have a greater benefit to a taxpayer. With a tax credit, if the taxpayer owes $2000, in taxes, their liability is reduced to $500. If they owe nothing, they can expect a $1,500 refund.
Q: What if the homeowners already claimed $500 in tax credits in 2006 or 2007?
A: The “lifetime caps” that used to be in place have been removed. Any previous claims do not count against the current $1,500 tax credit limit.
Q: Can a homeowner claim the credit for improvements to a second home?
A: No. The tax credit is only available for improvement to the taxpayer’s primary residence.
Q: Can a small business that operates out of a townhouse and installs residential equipment in a commercial setting claim the credit?
A: No. The tax credit may only be claimed by taxpayers on their personal income taxes for improvements to their primary residence.
Q: What other types of energy efficiency improvements qualify for the tax credits?
A: Homeowners may be able to qualify for the tax credits if they make qualified improvements to: windows and doors including skylights, storm windows and storm doors; roofing including metal and asphalt roofs; and insulation. All of these improvements qualify, but homeowner may only claim $1,500 in total for any improvements.
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Cool Ace Air Conditioning Provides Air Conditioning, Cooling, Heating, Air Quality, Duct Cleaning Services, Repair, and Installations to the Scottsdale, Arizona and Surrounding Areas. 3933 E La Salle Street Phoenix, AZ 85040 (602) 266-5223 -
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