Learn About HVAC Tax Credits
General Information About Tax Credits
As a provision of the January, 2013 “fiscal cliff” legislation, HVAC tax credits were retroactively extended for certain commercial air conditioning and heating units. The original energy efficiency tax credits expired as of December 31, 2011.
The HVAC tax credit extension 2012 covers any equipment qualifying under IRS Code: Section 25C. The current period extends from January 1, 2012, through December 31, 2013. Business owners can apply the credits toward any listed HVAC system installed during the qualifying period.
The specific conditions of the tax credit legislation haven’t changed substantially from the earlier program, but managers and purchasing agents should review specific eligibility details.
Under provisions of the new law, businesses can claim an HVAC tax credit up to 10 percent of the total cost of a qualifying heating or air conditioning installation with a maximum limit of $500. The tax credit can also be applied to other related improvements such as hot water heaters, windows, insulation and doors. The total tax credit must not exceed $500, and specific claims are categorized according to the following limits:
Air Conditioner Tax Credit: ($300 limit)
Air Conditioning Split Systems must comply with the specifications of the highest CEE tier as of January 1, 2009. Equipment must meet or exceed certified 16 SEER and 13 EER ratings.
Packaged Unit Air Conditioners must comply with the specifications of the highest CEE tier as of January 1, 2009. Equipment must meet or exceed certified 14 SEER and 12 EER ratings.
Heat Pump Tax Credit: ($300 limit)
Split system heat pump equipment must comply with the highest CEE tier as of January 1, 2009. Equipment must meet or exceed certified 8.0 HSPF, 15 SEER and 12.5 EER ratings.
Packaged heat pumps must comply with the highest CEE tier as of January 1, 2009. Equipment must meet or exceed certified 8.0 HSPF, 14 SEER and 12.5 EER ratings.
Furnace Tax Credit: ($150 limit)
Any natural gas, oil or propane furnace rated at 95 AFUE or higher can qualify for a tax credit.
Boilers: ($150 limit)
A natural gas, oil or propane boiler with a rating of 95 AFUE or higher qualifies for this tax credit.
Main Air Circulating Fans: ($50 tax credit limit)
Fan components operating as part of a natural gas, oil or propane furnace that uses no more than two percent of the total energy consumed by the appliance can qualify for this credit.
Certain commercial HVAC equipment qualifies for a tax deduction under the Energy Efficient Commercial Buildings Tax Deduction (CBTD) established under the Energy Policy Act of 2005. A tax deduction is subtracted from a company’s taxable gross income but is not a dollar for dollar deduction.
The CBTD allows building tenants and owners to write off the total cost of upgrading an HVAC system in the same year the equipment was purchased. The deduction is capped at $0.60/sq.ft, but can be used in conjunction with lighting and perimeter sealing installations for a maximum deduction of $1.80/sq.ft. Under the CBTB, the cost of a new HVAC system can be claimed in one tax year instead of amortizing the equipment over a several year period.
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