Energy Tax Credits for HVAC Upgrades


The holidays are well behind us, New Year’s resolutions are underway (or not…let’s be realistic, right?), and we are now moving into tax time. Yay! Cue the sarcasm and collective groans…. Believe it or not, though, taxes don’t have to be as bad as many think. Did you know that you can actually enjoy some tax credits if you’ve made an upgrade to your heating and cooling system? We understand that doing your taxes can be convoluted and messy - particularly when it comes to items out of the norm - so we’ve outlined the basics regarding these credits below.


First, be sure that your system upgrades are eligible. Guidelines for this can be found on the Energy Star website. Read the print carefully. While in nearly all cases, new construction and existing homes qualify, there are some instances in which the credits only apply to your principle residence (not a second home or rental).


Secondly, there is, of course, a ceiling to how much you can write off. The lifetime credit maximum is 10% of costs up to $500 for ALL of your energy improvements. In addition to the overall $500 cap, individual limits for certain upgrades exist:

~ $150 for a qualified hot water boiler or natural gas, propane, or oil furnace

~ $50 for an advanced main air circulating fan

~ $300 for any qualified equipment of energy-efficient building property specified by the IRS, such as central air conditioning units, specific approved geothermal and electric heat pumps, and certain water heaters.

Again, the Energy Star website will define what is included within these parameters.


Finally, to take advantage of your HVAC upgrade tax credit opportunities this season, you will need to have completed the installation by December 31, 2014, and submit the IRS Form 5695 by the tax-filing deadline. This is another one of those documents with plenty of fine print, so read carefully, and be sure you complete it accurately. We also advise you to maintain all receipts and manufacturer certifications in case you are asked for proof.


While this information provides a foundation for energy tax credits, we encourage you to speak with your accountant to ensure that your filings are accurate and that you are taking full advantage of this benefit. And as always, if you have any questions regarding your existing HVAC equipment or upgrading to a new system, we invite you to call us!