Let’s Talk about New HVAC Systems Tax Breaks

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Let’s Talk about New HVAC Systems Tax Breaks

Maybe you’re like many homeowners facing the reality of replacing your old, energy inefficient HVAC system. With legislation passed by Congress in 2022, you’re probably wondering what, if any, federal income tax credits are currently available.

Inflation Reduction Act of 2022

As part of the Inflation Reduction Act of 2022 signed into law on August 16, 2022, residential energy efficiency tax credits have been extended through 2023. Tax credits for residential renewable energy products such as clean energy heat pumps, will now run through the end of 2023. Please keep in mind, the tax credit information provided is for informational purposes only. For expert advice, you’ll want to contact your tax advisor, financial planner, or the Internal Revenue Service (IRS).

Non-business Energy Property Tax Credit

Congress renewed the existing Non-business Energy Property Tax Credit until December 31, 2022. There will be updates applied for 2023 that will remain effective through the end of 2032. For 2022, this means that you can get up to $500 in tax credits (10% of the cost) when you install any energy efficient (Energy Star-certified) air conditioner, heat pump, boiler, furnace, fan, advanced main air circulating fan, or non-solar water heater. To obtain the tax credit, you’ll need to fill out IRS Form 5695. The energy efficiency tiers are determined by the Consortium for Energy Efficiency with a standard air conditioner unit obtaining a $300 credit. This credit is only available on a primary residence, not for vacation homes, second homes, or investment rental properties.

Of course, there are many other benefits when you install a new energy efficient HVAC system.

  • Lower operational costs
  • Greater efficiency
  • More advanced technology
  • Increased value to your home
  • Improved temperature control
  • Enhanced indoor air quality
  • Peace of mind that your system won’t break down

Think about this. The U.S. Department of Energy estimates that almost 60% of a homeowner’s power bill stems from cooling and heating. The financial gain of upgrading to a new unit is immense.

Home Business

If you have a home-based business, you may be able to qualify for even greater tax savings. The costs related to purchasing and installing an HVAC system can be deductible if you can show that the system is an ordinary and necessary expense to operate your home-based IRS qualified business.

Want to learn more about obtaining the greatest value from a new HVAC system? Call your local experts at Bruce’s Air Conditioning & Heating at 480-968-5652. We help keep you comfortably cool and warm year-round.

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