Upgrading Your HVAC System Will Pay Off During Tax Season – HVAC Tax Refund
Aside from the fact that legally, all home and business owners will have to upgrade to the new eco-friendly systems and refrigerants, there is an upside to the costs you will endure.
There is a new tax law that allows business owners to immediately expense their air conditioning, heating, and ventilation system.
Under this new tax law, you can offset the cost of a whole new HVAC system for up to $5,000 or more. And that’s just on an average-sized system. Larger commercial systems will have an even more substantial value in savings.
Before this new law, you would have to take into account the depreciation of your HVAC system for up to a period of 39 years—despite the fact that they don’t even last that long. Now you can quite literally write off each and every component of your new HVAC system.
For homeowners, the tax situation is slightly different in that you technically can’t write off your entire new HVAC system and its components. However, you can claim a tax credit.
Claiming Your HVAC Tax Refund for Your New AC System
There are two criteria for qualifying for a tax credit on your new HVAC system:
1. Energy-efficient requirements. When you choose a new HVAC system for your home it must be rated at the highest energy efficiency tier.
The energy efficiency tiers are determined by the Consortium for Energy Efficiency. The Consortium for Energy Efficiency consists of an efficiency program of administrators. They are either provincial or state energy offices, local utility offices or organizations set up by the government.
2. It must be for a primary residence. You will only receive this tax credit for your primary residence. This means that your vacation home is a different story.
Of course, this may be circumstantial, especially if you rent your other properties for at least six months out of the year.
If your new HVAC system meets the energy efficient requirements and guidelines, you will be able to receive up to $300 maximum from the IRS. If you choose to install other pieces of property that also meet the energy efficiency requirements and guidelines, you may be able to receive up to $500.
It doesn’t seem like a whole lot compared to what business owners may get, but your new HVAC system can cost anywhere from $500 to $14,000. So depending on which equipment you choose for your home, this tax credit may be just enough.
In order to claim your tax credit on your federal tax return, you need to use the 5695 form. This form will allow you to enter the property costs of any qualifying energy-efficient improvements. This can include unit assembly and installation as well.
The IRS also requires this form to be in addition to a 1040EZ form or a 1040A form. Otherwise, you won’t be able to claim your tax credit. Your new AC unit will also count as a standard deduction rather than an itemized deduction.
What are the Benefits of Upgrading My HVAC System other than HVAC Tax Refunds?
Aside from doing your part to save the planet and the tax credits, there are other benefits to upgrading your HVAC system:
- Lower running costs
- Higher efficiency
- Reduced carbon footprint
- Convenience with smart technology
- Increased value of your home
- Better temperature control
- Better air quality in the home
The U.S. Department of Energy estimates that about 42 percent of homeowners’ power bills come from heating and cooling. It’s one of the greatest expenses of being a homeowner.
The upgraded air conditioning systems with the R32 refrigerant use 20 percent less refrigerant than the older systems. This means lower energy costs for you, which is one of the major benefits of this upgrade.
Another major benefit of this upgrade? Your health. We spend most of our time indoors these days, and with the old systems, the air inside our homes is actually up to five times more polluted than outdoors.
Now you can breathe easy knowing that the air inside your home is fresh and clean and that you’re not only benefiting the planet, but your bank account as well.
Get Off the Fence!
R22 refrigerant is in the past. The future is green, and it’s here.
With all the great benefits that the new and energy-efficient compliant HVAC systems provide, don’t wait to upgrade yours. For all of your questions, comments, and concerns involving plumbing, HVAC systems, electrical issues, and commercial services, don’t hesitate to contact us today!