Tax Credits for Energy Efficient
Air Conditioning In Your Home
By
Richard
Chapo
The government
often tries to influence our behavior through taxes. The tax credit
for new energy efficient cooling systems in our homes is one
example.
As part of the
provisions in the Energy Policy Act 2005, homeowners are entitled to
claim tax credits on use of a few energy saving items. They include
the use of energy saving windows, doors, roofing, furnace and
boiler, water heater and air conditioner. As energy becomes scarcer
by the day, it is essential to conserve as much energy as possible.
The government, by way of giving tax credits, also encourages using
alternate sources of energy.
Using energy
efficient air conditioning systems is one of the items that qualify
for tax credit. Individuals who install this type of air conditioner
are eligible for a tax credit of up to $300. The models that qualify
are obviously costlier than the ordinary ones. However, this
calculation would show that it is advisable to install a new energy
saving air conditioner. Even if you save just $10 a month on average
by way of electricity bills it comes to $120 for a year. Add to that
the tax credit of $300, your net saving is $420. This amount should
be good enough to prod a homeowner into buying an energy efficient
air-conditioner.
Of course, not all
air conditioners are eligible for a tax credit. Even, not all Energy
Star air conditioners qualify, only some do. Very efficient central
air conditioners qualify for the tax credit if they meet the
following criteria:
1. The Energy
Efficiency Ratio has to be 13.0 or higher (in some states its 12.5).
2. Certified
technician needs to install the equipment.
3. The Seasonal
Energy Efficiency Ratio (SEER) has to be 15.
SEER measures
performance throughout the season and EER measures performance on a
very hot day. Central Air conditioning systems must meet the
standards set by the Consortium of Energy Efficiency (CEE). The
specifications for each state vary slightly.
The tax credit for
energy efficient cooling systems in our home is just another step in
saving money on both your energy bill and taxes. Since tax credits
are reduced from the actual amount of tax you owe, not your gross
income, you should strongly consider taking advantage of this one.
Richard A. Chapo is with Business Tax Recovery - providing
information on
taxes.
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