As 2015 winds down, now is the time to consider how you can save money and stretch your household budget in the upcoming year. Like most Florida homeowners, you most likely look for ways to reduce your energy use and lower utility costs. One of the most overlooked options, though, is tapping into the federal, state and local tax credit and rebate programs for residential HVAC costs. Even if you cannot utilize these programs for 2015, you can consider the financial benefit should you make improvements to your heating and air conditioning equipment in 2016.
Federal Tax Credits
For the 2015 and 2016 tax years, the IRS allows for two types of tax credits for homeowners: the Residential Energy Efficiency Property Credit and the Nonbusiness Energy Property Credit. We have provided an overview of each type of credit as it applies to your HVAC system, and you can learn more on the IRS website or by consulting a tax professional.
Geothermal Heat Pumps
The Residential Energy Efficiency Property Credit allows for a 30% tax credit on homeowner expenses for qualified geothermal heat pumps and other improvements that improve the energy efficiency of your home.
- Primary or secondary homes in the United States, with some exceptions
- New construction
- Rental properties do not qualify
- No cap or upper limit, with some exceptions
- Certain installation costs may be allowable
- Tax credit cannot exceed taxes owed, but unused portion can be carried over to the next tax year
Although all ENERGY STAR geothermal heat pumps should qualify for the tax credit, you should verify that your geothermal heat pump meets the following specifications:
Closed Loop: EER ≥ 17.1 & COP ≥ 3.6
Open Loop: EER ≥ 21.1 & COP ≥ 4.1
Closed Loop: EER ≥ 16.1 & COP ≥ 3.1
Open Loop: EER ≥ 20.1 & COP ≥ 3.5
Direct Expansion: EER ≥ 16 & COP ≥ 3.6
Nonbusiness Energy Property Tax Credit
The Nonbusiness Energy Property Tax Credit provides a tax credit for 10% of certain energy-efficient improvements up to a certain dollar amount based on the type of improvement and a total maximum tax credit of $500, such as energy-efficient doors and windows, insulation, heating and air conditioning systems. In some cases, the cost of installation can be included in the tax credit. The HVAC improvements that are allowed under the tax credit are:
- Advanced main air circulating fans ($50 maximum)
- Air source heat pumps ($300 maximum)
- Central air conditioning ($300 maximum)
- Gas, propane or oil furnaces ($150 maximum)
Other Rebates and Credits
As a homeowner you may qualify for other rebates and credits for improvements and services to your heating and air conditioning systems:
- Under the Florida Energy Efficiency and Conservation Act, public utilities are required to meet specific energy savings goals that are determined by the Florida Public Service Commission. As part of the meeting the requirement, utility companies offer residential rebates and incentives.
- Florida Public Utilities offers a $725 rebate to homeowners who switch to a natural gas furnace and a $500 rebate for homeowners who replace older natural gas furnaces.
- Tampa Electric also has rebate programs for HVAC equipment and services.
- Many of the HVAC manufacturers periodically offer rebates and incentives for installing new systems and replacing older, less efficient systems.
Contact us to learn more about how to save money on your heating and air conditioning costs!