HVAC Tax Credits in 2009 Stimulus

by Charlie McCrudden
ACCA

Here's a summary of important HVAC-related tax credits included in the 2009 stimulus package, along with answers to frequently asked questions. Residential Tax Credit Details Larger Tax Credit For qualified improvements (see spreadsheet), 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 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.

Per-Appliance Caps Removed

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 for a high efficiency furnace or $300 for a high efficiency central air conditioner or heat pump have been removed. Lifetime Limit Removed Homeowners that previously claimed tax credits in 2006 or 2007 are eligible for the full $1,500 limit. Expanded Geothermal Tax Credits Homeowners who install geothermal heat pump systems may be able to claim up to 30% of the installed costs in tax credits in the year the system is placed into service. The $2,000 tax credit limit has been removed. The geothermal tax credit has a longer term, from January 1, 2009 and expires December 31, 2016. HVAC contractors should be aware that the $1,500 limit applies to many types of energy efficient home improvements, including windows and doors, roofing shingles, and insulation. All of these contractors will be competing for the work related to these tax credits. If you are preparing marketing materials, make sure you include information about these tax credits.

To see more Details about Tax Credits... Click Here.

FAQ'S
Here are some answers to several frequently asked questions so far:

Q:  When does this go into effect?
A:  Unless stated otherwise in the bill, today is the effective date.  Specifically regarding the residential efficiency credits, the expanded $1,500 credit is retroactive to the start of 2009.  Products that qualified for the existing $500 credit will still qualify for the $1,500 credit if installed prior to today.  Equipment installed today through 12/31/2010 must meet the minimum requirements outlined in HARDI's summary.

Q:  Is it a $1,500 credit in both 2009 and 2010?
A:  No.  $1,500 is the total credit available to primary residence households for 2009 and 2010.

Q:  What if a customer claimed the $500 efficiency credit previously in 2006, 2007, or 2009?
A:  It does not affect this credit.  Those same customers are still eligible for the full $1,500 credit for qualified improvements made in 2009 and 2010.

Q:  What about envelope improvements?
A:  Upgrades to doors and windows must now have U-factors or SHGC of .30 or lower to qualify and insulation must meet 2009 IECC requirements.  These improvements count towards the $1,500 cap in 2009 and 2010.  The previous thresholds qualify for the credit if installed between 1/1/09 and 2/16/09.

Q:  What about advanced circulating fans now?
A:  30% of the costs associated with the installation of fans that use less than 2% of the total furnace energy consumption qualify.

Q:  What about solar and geothermal systems?
A:  30% of the total installation costs of solar hot water, solar electricity, wind generation, and geothermal heatpumps can now be recovered as a tax credit without any dollar limitations.

Q:  What about replacement jobs in which a 95% AFUE furnace but only a 13 SEER a/c is installed?
A:  30% of the final installation costs up to $1,500 associated specifically with the 95% AFUE furnace will qualify for the credit.  Should the installation costs associated with the furnace not reach $5,000, 30% of the installation cost can still be claimed and the difference between that amount and the $1,500 cap can be applied to any other qualifying improvements.

Q:  Do these improvements apply to new home construction as well?
A:  No.  On-site renewables generation such as solar and wind qualify for new construction credits, but not the envelope or HVAC credits addressed above.

Tax Credit Stimulus Brochure for Carrier Products

Cash-In on Your Comfort with Federal Tax Credits -
Qualifying Carrier High-Efficiency Systems Can Save You Money Now and in the Long Run.

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