If your house is feeling drafty in the winter and toasty in the summer, it might be time for a new HVAC system. As one of the most important parts of the house, the HVAC system regulates temperature to create a comfortable, safe, and energy-efficient environment. A new HVAC system is an investment, but one that can add great value to a home. However, even if a new HVAC system is a necessity, many people put off the purchase because of the cost or buy a sub-par unit to save money. The good news is that you may be able to get back some of the cost with help from the federal government. Before you call about Northern Colorado HVAC installation, read on to discover how a new HVAC system may qualify you for a tax credit.
What Is a Tax Credit?
Like the name implies, a tax credit reduces the amount of money you owe on your income taxes. If you owe $500 in taxes and have a $200 credit, the amount you owe drops to $300. Tax credits are available for a number of things ranging from home improvements to childcare costs, but it’s up to taxpayers and their accountants to determine if they are eligible.
Which HVAC Systems Qualify for a Tax Credit?
Not all new HVAC systems qualify for a tax credit. The goal of the credit is to encourage homeowners to purchase units that are energy efficient. The first step in finding a unit that is eligible for a tax credit is to look for the EnergyStar logo. This certification is given to HVAC units and appliances that are energy friendly. However, just because a unit has the EnergyStar logo doesn’t automatically mean you can get a tax credit. In order to receive the tax credit, the unit must be the best of the best—the most energy efficient of EnergyStar systems.
The energy efficiency of HVAC systems is measured through units: AFUE for furnaces and SEER for air conditioners. The higher the number, the more energy efficient the system. In general, energy-efficient systems tend to cost more. However, they can end up saving you money in the long run by lowering energy costs by around 20% on average. Before purchasing a unit, check to see if it meets the qualifications necessary to be eligible for a tax credit. Click here for more information about what qualifies for a tax credit.
How Do You Get the Tax Credit?
The amount of the tax credit often depends on the cost of the system. In many cases, the credit equals 10% of the total cost of the residential system, including installation.
To get the tax credit check to see if your unit qualifies by visiting IRS.gov and the EnergyStar website. Then, as you file your taxes, include Form 5695. You’ll need to know the total cost of the unit and the kilowatt capacity. Tax law is always changing so be sure to consult your accountant before purchasing a unit if you want to be sure you qualify for the credit. Click here to learn more about filing for the tax credit.
Purchasing a new HVAC system can make a dent in your wallet but spending more to get an energy-efficient system may be worth the extra investment. And, if your unit qualifies for a tax credit, it will reduce some of the cost.