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For a limited time, the Energy Policy Act of 2005 provides, among other things, valuable federal tax credits for consumers who purchase specified energy-efficient products for their homes. Among these specified products are certain high-efficiency air conditioners, heat pumps, furnaces and related equipment, which the Internal Revenue Service refers to as “Qualified Energy Property.”
A tax credit reduces the amount of income tax you have to pay. To receive a tax credit, you must claim the credit on your federal income tax form. This will increase the tax refund you receive or decrease the amount you have to pay.
Generally, a tax credit is more valuable than a tax deduction. A tax credit reduces the amount of income tax you have to pay, while a tax deduction lowers your taxable income before your tax liability is computed. For example, if you are in a 28% tax bracket, a tax deduction will reduce the income tax you pay by 28% of the value of the tax deduction. But a tax credit reduces your federal income tax by 100% of the amount of the credit, regardless of your tax bracket. You should consult with your tax advisor for additional guidance.
Any taxpayer who installs qualifying energy-efficient products on, or in connection with, his or her principal residence in the United States during a specified time period may be eligible to receive an energy-efficiency tax credit.
The energy-efficiency tax credit applies to Qualified Energy Property placed in service from January 1, 2006 through December 31, 2007. You cannot receive an energy-efficiency tax credit for property placed in service in 2005. Nor can you claim an energy-efficiency tax credit on your tax return for 2005, even if the property was installed after January 1, 2006. The IRS defines “placed in service” as when the products or materials are ready and available for use. This would generally refer to the date of installation, not the date of purchase.
You can generally claim the amount you spend on Qualified Energy Property during the applicable taxable year, subject to certain limitations. For example, the maximum tax credit available to a taxpayer for all qualifying home improvements under the Energy Policy Act during the two-year period is a combined total of $500. Each category of Qualified Energy Property is also subject to a maximum credit amount. In addition to other qualifying home improvements and subject to the $500 maximum, the following tax credits are available:
- Up to $300 for any qualifying electric heat pump.
- Up to $300 for any qualifying central air conditioner.
- Up to $150 for any qualifying natural gas, propane, or oil furnace.
- Up to $50 for any qualifying advanced main air-circulating fan that is used in a natural gas, propane or oil furnace.
Several AirEase products meet the IRS’s definition of Qualified Energy Property. These products qualify for various energy-efficiency tax credits, if they are combined with the proper coil and/or furnace, as applicable. View Qualifying Models.
Air conditioner and heat pump ratings are based on U.S. government standard tests of models combined with a matching coil and/or furnace. Efficiency ratings may vary with different coils and furnaces. Similarly, efficiency ratings may vary when combined with different furnaces.
What is a coil?
You can determine if your AirEase product qualifies for an energy-efficiency tax credit by going to Qualifications and answering a series of questions. If your product qualifies, you will be prompted to print a Certification Statement certifying that your AirEase product meets the IRS definition of Qualified Energy Property, and qualifies for the tax credit allowed under Section 25C of the Internal Revenue Code, provided it is combined with the proper AirEase coil and/or furnace, as applicable.
For AirEase air conditioners and heat pumps, Allied Air Enterprises will only provide certification statements for AirEase equipment matched with AirEase coils and/or furnaces.
In order to obtain a Certification Statement, you should have the following information handy:
- Product purchase date
- AirEase product model number.
- If applicable, the model number for the matching AirEase coil.
What is a coil?
- If applicable, the model number for the matching AirEase furnace.
The model numbers can be found on your contractor’s invoice or sales agreement, or in the product information packet. If you cannot locate the model numbers, contact your installing Independent AirEase Dealer.
In order to receive an energy-efficiency tax credit, you must claim the appropriate credit on the income tax return you file with the IRS. The IRS does not require that you submit the manufacturer’s Certification Statement with your tax return. However, if you claim a tax credit for Qualified Energy Property, you should retain the Certification Statement as part of your tax records, along with the receipt from your purchase. You should consult with your tax advisor for additional guidance, or refer to the IRS rules.
Air conditioner and heat pump ratings are based on U.S. government standard tests of the models combined with a matching indoor coil. Efficiency ratings may vary with different coils. Similarly, efficiency ratings may vary when combined with different furnaces.
A taxpayer may claim a tax credit with respect to expenditures paid or incurred for “Qualified Energy Property” that is installed on or in connection with the taxpayer’s principal residence located in the United States and originally placed in service by the taxpayer between January 1, 2006 and December 31, 2007. The maximum amount of tax credit allowable to a taxpayer for all qualifying home improvements under the Energy Policy Act of 2005 during the two-year period is a combined total of $500. A taxpayer claiming a credit for Qualified Energy Property should retain the manufacturer’s Certification Statement as part of the taxpayer’s records, along with the receipt from purchase. You should consult with your tax advisor to determine what qualifies for a tax credit or refer to the rules of the Internal Revenue Service (the “IRS”). The IRS will determine the final tax credit amounts. Allied Air Enterprises expressly disclaims all liability for damages of any kind arising out of a taxpayer’s claim for an energy efficiency tax credit or the unauthorized alteration of the data listed in the manufacturer’s Certification Statement.
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