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Tax savings on installing central heat and air

Tax Credit for Installing Energy Star Heating and Cooling

If your furnace is showing signs of lethargy, made it through the winter but you’re crossing your fingers for next season, you might consider the big savings you can make by installing an Energy Star heating system with 30% of the cost, up to $1500, off your tax liability. Be sure to figure in the ongoing savings you’ll make on your heating bill each month with a more energy-efficient system.

Suzanne Cosgrove, writer of an article for HouseLogic.com in September, 2009, says that Energy Star, the federal program promoting energy efficiency, estimates that “half of what the average household spends on energy bills goes toward heating and cooling”. She says their estimate is a reduction of utility costs by 20%, or $200 average per year. For the full article regarding how the program works, in practical terms, you can download it here.

To understand the basic details, I went to the Energy Star website (http://www.energystar.custhelp.com) which answers questions about how this tax credit works.
 

Ms. Cosgrove continues:

“Even if you purchase multiple products you can only get a maximum of $1,500 over the 2-year period (2009 & 2010). Basically you can spend up to $5,000 during this 2 year period on a single or multiple products, for your principal residence that you own and live in, and get 30% or $1,500 (30% of $5,000 = $1,500) back as a tax credit. If you get the entire $1,500 credit in 2009, then you can't get anything additional in 2010.
"Two or more unmarried people living in the same home who own it jointly are each eligible for the tax credit on the amount of money they each individually spend to make home improvements - up to a maximum of $1,500 total for the home. Example: Person A pays $3,000 towards new windows, and Person B pays $2,000 towards the new windows (for a total expenditure of $5,000 on new windows). Person A will get 3/5 ($3000 = 3/5 of $5000) of the $1,500 tax credit or $900, and Person B will get 2/5 of the $1,500 tax credit ($2,000 = 2/5 of $5,000) or $600.”

 

In addition, all 50 states have an Energy Star appliance rebate program but the Energy STar website tells you that not all Energy Star appliances qualify for the tax credit or rebate.  For questions on appliance rebates call:  DOE Recovery Act Clearinghouse at 1-888-363-7289.

Also, check out this Energy Star web page (http://www.energystar.gov/index.cfm?fuseaction=rebate.appliance_rebate) for state-specific information on the amount of rebate you can expect and what appliances qualify. For your convenience, you can download the Tennessee fact sheet here (http://www.energystar.gov/index.cfm?fuseaction=rebate.appliance_rebate&state=TN).

 

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