Do the new federal tax credits help me?
On February 16, 2009, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law. The ARRA is designed to get our economy moving again with spending and tax incentives aimed at investing in our nation’s road and energy infrastructure and increasing the energy efficiency and performance of our homes and commercial buildings. How does this relate to heating, cooling and plumbing?
Tax Credit Details for Your Primary Residence
- Larger Tax Credit for Traditional Heating and Cooling Improvements:
Homeowners may be able to claim tax credits equal to 30% of the installed costs (up to $1,500) on qualifying equipment.
- Longer Term:
The new tax credits are retroactive to January 1, 2009, and expire on December 31, 2010… excluding geothermal improvements. The $1,500 limit is for all improvements made during the two year term, not $1500 each year.
- Expanded Geothermal Tax Credits:
Homeowners who install qualifying geothermal heat pump systems can claim a federal tax credit of 30% of the installed costs… NO LIMIT! This credit must be claimed during 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.
- 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. Homeowners have a total of $1,500 available as a tax credit. Let’s say you install new qualifying windows in your home and receive a $500 tax credit. You then install a qualifying heating and cooling system. You have $1,000 available as a tax credit on this purchase.
- Lifetime Limit Removed:
Homeowners that previously claimed tax credits in 2006 or 2007 ARE eligible for the full $1,500 limit.