Get a cool tax credit with that new air conditioner or furnace.

Florida county green tax incentives

Some Florida cities and counties offer their own tax incentives for green building. For a reference list, visit the U.S. Department of Energy website.

WASHINGTON – Aug. 25, 2011 – There are few certainties in this world, but here’s one: When it’s hot enough to fry an egg and a serving of hash browns on the sidewalk, your air conditioner will shudder and die.

A new air conditioner could save your sanity and quite possibly your marriage, but a new heating and air conditioning system doesn’t come cheap. The good news: You may be able to get some of that money back when you file your tax return. The bad news? You would have been eligible for a much larger tax credit if you had replaced your HVAC last year.

In December, Congress extended tax credits for energy-efficient home improvements through 2011, but it also pared them back. The maximum tax credit you can claim for most energy-efficient home improvements in 2011 is $500, down from a maximum credit of $1,500 in 2009 and 2010. The law also caps the amount you can claim for specific projects.

For example, the maximum tax credit you can claim for an energy-efficient heating and cooling system is $300, says Helen O’Planick, an enrolled agent in Manchester, Pa. The maximum credit you can claim to replace your leaky windows is $200.

Still, a modest tax credit is better than none at all. Homeowners who are considering energy-efficient improvements should take advantage of it while it lasts, because there’s no guarantee the credit will be extended, O’Planick says.

If you’ve made your home more energy-efficient this year, or plan to do so in the near future, here’s what you need to know:

The $500 credit is a lifetime maximum. If you’ve claimed $500 or more for energy-saving home improvements since 2006 – the first year the credits became available – you’re out of luck.

The maximum applies to the taxpayer, not the property. For example, suppose you claimed $500 in energy-efficient improvements in 2007, then sold the house and bought a new one. You can’t claim the credit for any work done on your new house, because you’ve already hit your lifetime maximum, O’Planick says.

The credit is limited to your primary residence. A new heat pump may reduce the cost of heating your ski chalet, but you can’t claim a tax credit for it.

The contractor or manufacturer should be able to provide a statement certifying that the product or component qualifies for the tax credit. You don’t have to submit this with your tax return, but should keep it with your tax records, along with your receipt for the purchase.

In general, windows, insulation and other energy-efficient home improvements qualify for the credit as long as they have an Energy Star designation. Energy Star products must meet energy-efficiency guidelines established by the Department of Energy and the Environmental Protection Agency.

Not all Energy Star products qualify for the tax credit. O’Planick says she often hears from taxpayers who believe they’re eligible for a federal tax credit because they purchased a new Energy Star refrigerator or washer-dryer. These appliances may cut your energy bill, but they don’t qualify for the energy-efficient tax credit, O’Planick says. Ovens, ceiling fans, room air conditioners and light fixtures don’t qualify, either.

However, while such products are ineligible for the federal tax credit, they may qualify for a state rebate. Last year, three dozen states offered rebates to residents who purchased Energy Star appliances. Most of those programs have been closed, but a few states are still accepting applications. For more information, go to energysavers.gov.

Homeowners who plan more ambitious energy-efficiency improvements are eligible for a larger tax credit and have more time to claim it. You can claim a tax credit of up to 30 percent of the cost of geothermal heat pumps, solar-energy systems, wind-energy systems and fuel cells. There is no cap on this credit, and it’s available through 2016.

There’s still time to claim a credit for energy-efficient home improvements made in 2009 or 2010. If you failed to claim the credits for the year in which you made the improvements, you can amend your return, O’Planick says.

It’s worth the effort: Improvements made in those years are eligible for a maximum lifetime credit of $1,500. You can find more information about the tax credit and eligible home improvements at http://www.energystar.gov/.
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