Not sure what to spend your tax return on this year? Why not consider upgrading your current heating and cooling system to an energy-tax-credit-eligible system. New equipment can allow you to reap the benefits of a more efficient unit, lower monthly energy bills, and yearly tax credits.
Consider the Savings
The tax credit makes it a little easier to do what you most likely will have to do anyway. By upgrading your HVAC system to energy-efficient units, you can cut your utility costs, on average, by 20% or $200 annually. Although the initial cost may be more than you’d like to spend, it is a wise investment. The savings will pay off over time - and you can feel good about increasing your comfort level at home and lowering your household’s drain on non-renewable fossil fuels. Meanwhile, you will increase the resale value of your home by replacing your old equipment.
Do Your Homework
Not all heating and cooling systems are created equal. An Energy Star sticker doesn’t automatically qualify you for tax credits. You can go to the Energy Star website, but please note that at anytime the annual fuel utilization efficiency ratings (AFUE) can be updated. The better way to find tax credit eligible systems is to ask your HVAC Contractor, as they will be aware of the most current standards. To verify tax credit eligibility, ask your HVAC contractor to provide the Manufacturer’s Certification Statement for the equipment you plan to purchase.
Look for Rebates
Your state or local utility company may offer rebates or incentives for replacing your old HVAC system. If they both offer promotions, submit for the pair and relish in savings on your new equipment. You can also review any current rebate offers from the leading HVAC manufacturers, such as Trane, Carrier, and Lennox.
Go Ahead and File
File Tax Form 5695 with your tax return along with the Manufacturer’s Certification Statement. You cannot file without the MCS, so it is imperative that you have this document along. Pay attention to detail on the tax form, as it can be confusing.
If you are struggling with the idea of whether or not to replace your current HVAC system, keep in mind the overall savings and comfort that come with it. You may find you will save enough in energy costs to easily justify the cost. Spring is a great time to have your new system installed, when HVAC contractors aren't as busy.