There may be some tax credits waiting for you during 2014 if you choose to install a new air conditioner this year. However, knowing whether or not you will qualify can get a bit tricky. Here are some tips and tricks for getting a tax credit when you install a new unit.
Which Systems Receive Credits?
First and foremost, you’ll need to keep in mind that whether or not a tax credit applies to your purchase depends on one major factor – the SEER rating. Most home and business owners choose a package or split system air conditioner for the most efficiency. According to current tax laws, credits for split systems are only given if the SEER rating is 16 or higher. However, with package systems, you could qualify if the SEER rating is 14 or higher.
Getting Your Credits
In order to claim your tax credits on your federal return, there are a few things you’ll need to keep handy. Of course, you’re going to need your receipt to prove that the purchase was indeed made. You’ll also want a copy of the Manufacturer’s Certification Statement which proves that the model you chose does, in fact, meet the criteria for receiving the credit. These will need to be filed with what is known as form 5695, and this is available from the IRS website or from your tax professional. Finally, be sure to speak with your contractors as they likely have advice on the subject matter.
How Much Can You Get?
In a nutshell, qualified home and business owners can receive a total of 10% of their total purchase and installation costs up to a maximum of $300 on air conditioners. However, if you’ve also installed a qualifying furnace at the same time, you can receive another 10% of up to $150 for this. Finally, if the heating system came with a main circulating air fan, you can claim 10% up to $50 for this installation, but you can only do so if the energy usage of the fan comprises less than 2% of the cost of running the furnace.
Are These the Only Savings?
While the tax credits for air conditioner installations (and furnaces, too) can certainly help home and business owners save some money at tax time, these aren’t the only savings you’re going to notice. Air conditioners that have SEER ratings above 14 are incredibly energy efficient, and this simply means that you’re going to get more cool air for every dollar that you spend in energy costs. In essence, this means that you will enjoy plenty of comfort and save money on your energy bills at the same time. Some consumers have reported saving as much as $1000 per year on energy after upgrading their old, inefficient systems to new ones.
While the cost of installing a new air conditioner can be a bit off-putting for some, there are tax credits in place to help you out. As if this weren’t enough, saving up to $75 per month on energy costs can also justify the installation of an energy-efficient unit to keep you comfortable.