Government encourages upgrading furnaces.
Upgrading your furnace to meet Energy Star efficiency requirements during 2009 and 2010 could mean credit on your federal taxes. On February 17, 2009, President Barack Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) as part of his economic stimulus package to save people money and to protect the environment. Energy Star is a joint program between the U.S. Department of Energy and U.S. Environmental Protection Agency. Does this Spark an idea?
Eligible Furnaces
According to the Energy Star website, energy efficient products may cost the homeowner more up front but will pay for themselves in a reasonable amount of time through lower energy costs. Units eligible for this tax credit use energy to heat the house with 90 to 95 percent efficiency. One class of furnace burns a fuel to produce heat. These include oil, natural gas or propane furnaces, or gas, propane and oil hot boilers. Advanced main circulating fans blow the heat from the generating source through ducts to heat the home. Depending upon the furnace, the fan might be the only thing which qualifies for the tax credit. Air source heat pumps pull air in from outside to heat or take air inside and blow it out in order to cool. Finally, biomass stoves burning biological material with 75 percent efficiency also qualify.
Tax Period
Purchase a qualifying energy efficient product or renewable energy system for your existing home between January 1, 2009 and December 31, 2010 and you may qualify for credit on your tax return. The purchase must be "placed in service" (bought, installed and working) during the eligible time period. Furnaces for new homes or homes that are not your primary residence do not meet the federal IRS guidelines.
Maximum Tax Credit
The tax credit amounts to 30 percent of the product and installation costs or $1,500, whichever is lower. This is the maximum amount a household can receive. For example, a two income household can each claim a percentage on their taxes; however, the maximum tax credit allowed will not exceed the IRS guidelines. Likewise, in the event a house has dual heat sources, the owner can still only claim up to the stated limit. And finally, even though this tax credit spans two years, the most a homeowner can claim between the two years is still 30 percent of cost or $1,500.
Additional Credit
The ARRA has an additional tax credit for a geothermal heat pump installed in new construction and existing homes for both primary and secondary residences. Geothermal heat pumps pull in the natural heat from underground to heat and cool the house. Because they are the most efficient, the government tax credit is 30 percent of cost with no upper limit. In addition, tax payers can claim credit for this purchase through December 31, 2016.
Tags: Energy Star, credit your, energy efficient, heat from, heat pumps, heat pumps pull, percent cost
