Tapping into the New Government HVAC Tax Credits for 2011
So you probably already know that installing an energy efficient HVAC system or upgrading your old one to a newer model will save you a great deal on your home heating and cooling costs. But did you also know that you can get a break on your taxes?
Believe it. There are quite a few systems and types of equipment that will qualify you for this tax credit. So if you were on the fence about whether to upgrade your HVAC system now or wait, this may be just the kind of incentive you were waiting for.
What Qualifies for a Tax Credit?
Of course, you have to make sure that the system you put in qualifies for the 2011 tax credit. It’s probably a good idea to discuss your options with a professional so that you can be sure you get the right type of product.
For instance, if you’re interested in a new gas or propane furnace, you need to select one with an Annual Fuel Use Efficiency (AFUE) of 95% or better to qualify for the credit. The same goes for gas, oil or propane boilers. So if you’re in the market for any of these types of equipment, make sure the one you buy meets the criteria to qualify you for the tax credit.
Many air conditioning units also meet the requirements for the new government 2011 tax credits for HVAC systems. These include any central air conditioning systems with a Seasonal Energy Efficiency Ratio (SEER) of at least 16. Many air source heat pumps also fall into this category and the same SEER specifications apply to them.
Simpler Ways to Get the Tax Credit
But even if you don’t need a whole new furnace or air conditioning system at the moment, you can still take advantage of these HVAC system tax credits by adding or replacing some part of your HVAC system. For instance, having a new fan installed on your furnace or AC unit that uses 2% or less of the total energy the furnace or AC unit consumes will qualify you for a tax break.
And you can even benefit by upgrading your water heater to a more energy efficient model. To qualify for the tax credit, a heat pump water heater must have an energy factor of 2.0 or more, while propane and gas water heaters need to have a thermal efficiency rating of no less than 90% an energy factor of at least 0.82.
The manufacturer of the equipment you purchase will have specific information on what models qualify. They should also provide certification documents to support this. Make sure you select products that fit the requirements and obtain all of the necessary documents so that you can take full advantage of these incentives.
Also, you can only claim equipment that is installed in your primary place of residence, so equipment purchased for your vacation home or other building won’t qualify. Because there are so many specific requirements, it’s important to make sure you’re meeting all of them before you make a purchasing decision based on these tax credits. If you’re still not sure, talk to your accountant, who should be able to guide you through both the process of qualifying for the credit and claiming it on your next return.
Measuring Price Versus Value in Picking a Contractor
Where do you start when you’re trying to pick out a contractor to install an HVAC system in your home? Of course you don’t want to pay more than you have to, but you also want to make sure the work is done right. Gathering bids from a few different sources is a great way to start, but where do you go from there?
How to Think About Contractor Value
It can certainly be tempting to go with the lowest bidder, but you have to be careful. While some contractors may charge a bit more, it’s often a price worth paying if you want the job done right. Paying less up front may seem like a good deal, but it will cost you more in the long run if you’re not careful.
In particular, keep in mind that even contractors who charge less for the same work still have to make a profit somehow. Sometimes that means corners will be cut. They might use less skilled workers or inferior materials in the construction or installation process. This kind of behavior is rare, but you increase your chances of encountering it by seeking out the lowest possible bids.
An HVAC system is a big investment and has a big impact on how comfortable you are in your home. You probably did a lot of research to find just the right system to suit your needs, but if it isn’t installed properly, who knows how long it will work or how well it will keep you comfortable. Even the best, most energy efficient system won’t save you money or keep you comfortable if the contractor you use cuts corners on installation.
Even worse, an improper installation could cause your system to break down more frequently. Those unnecessary repairs might even cut years off of the system’s life. And then you’re stuck paying even more money. For all of these reasons, going with a cut-rate contractor over one who charges a bit more but provides better quality service is really no deal at all.
Finding a Good Middle Ground
But that doesn’t mean you have to be overcharged either. A good, reputable HVAC contractor will sit down with you and explain exactly how much the installation process will cost and what individual elements you’re specifically paying for. They’ll outline exactly what they’re going to do and why it’s important so that you understand where they’re getting their figures from.
Of course, it’s still hard to spot someone who is grossly overcharging or undercharging for a particular type of work if you don’t have any frame of reference. That’s why it’s a good idea to get as many quotes as you can.
It’s well worth it to get at least five or six quotes from different companies before you make your decision. That way you’ll have a better frame of reference to judge which prices seem too high and which seem just too good to be true.
