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Q & A: Do heat pumps qualify for tax credit on our return? We’re told yes from the heat company, no from our tax guy?

Question by : Do heat pumps qualify for tax credit on our return? We’re told yes from the heat company, no from our tax guy?
We had our gas heat replaced with a heat pump. The electric company said we would get a credit for making our home more energy efficent but the tax accountant said there is no tax credit for the heat pump. Is this true?

Best answer:

Answer by Gorkbark Porkduke Gefunken Fubar
Certain items qualify for the tax credit. Go to the IRS web site and do a search for energy tax credit.

Heat pumps offer an energy-efficient alternative to furnaces and air conditioners in moderate climates. Like your refrigerator, heat pumps use electricity to move heat from a cool space into a warm, making the cool space cooler and the warm space warmer. During the heating season, heat pumps move heat from the cool outdoors into your warm house; during the cooling season, heat pumps move heat from your cool house into the warm outdoors. Because they move heat rather than generate heat, heat pumps can provide up to 4 times the amount of energy they consume.

Requirements

Split Systems:
HSPF >8.5
EER >12.5
SEER >15

Package systems:
HSPF >8
EER >12
SEER >14

Tax Credit includes installation costs.

30% of the cost (including installation/labor costs), up to $ 1,500.

Tax credit in effect in 2009 and 2010. Must be installed in your “principal residence” between January 1, 2009 and December 31, 2010.

Partial list of qualifying systems:

http://ari.org/Content/FederalTaxCredits_896.aspx

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4 Responses to Q & A: Do heat pumps qualify for tax credit on our return? We’re told yes from the heat company, no from our tax guy?

  1. Judy

    Depends on the heat pump, has to meet energy star requirements to get the credit. But I’d find a new tax guy. For 2008 returns there was no energy credit for heat pumps, but it’s reinstated for 2009 returns.

  2. the tax lady

    From http://www.energystar.gov
    Air Source Heat Pumps
    Heat pumps offer an energy-efficient alternative to furnaces and air conditioners in moderate climates. Like your refrigerator, heat pumps use electricity to move heat from a cool space into a warm, making the cool space cooler and the warm space warmer. During the heating season, heat pumps move heat from the cool outdoors into your warm house; during the cooling season, heat pumps move heat from your cool house into the warm outdoors. Because they move heat rather than generate heat, heat pumps can provide up to 4 times the amount of energy they consume.

    Requirements
    Split Systems (most people seem to install split systems):
    HSPF >8.5 EER >12.5 SEER >15

    Package systems:
    HSPF >8 EER >12 SEER >14

    Tax Credit includes installation costs.

    So, does your unit meet the above threshholds? This has to be higher end system, not just anything the installer had on hand. Do you have the manufacturer certificate showing this?

    If yes, did you install in 2009? There was no such credit in 2008. The credit is line 3a of the 2009 form.

  3. HHSDad

    Your tax guy is wrong. There was no credit for heat pumps in 2008. It’s back in 2009. Assuming that your heat pump qualifies as Gork says, I’d consider getting someone else to do my taxes. I’d be afraid to find out what else your tax guy doesn’t know.

  4. The Gill Machine

    It all depends on the efficiency of the heat pump. You may have heard of SEER/EER ratings for home Comfort Systems. These are the determining factor.

    Now, I know with conventional heating and air conditioning systems, the tax credit will qualify on Package units of 14 SEER/ 12 EER, and Split Systems of 16 SEER/ 13 EER.

    For heat pumps, the package units have the same requirements as conventional HVAC systems, but Split Systems only have to meet the requirement of 15 SEER/ 12.5 EER.

    This is part of the American Reinvestment and Recovery Act (ARRA) of 2009, and you should be eligible for a tax credit of 30% of the installed cost, up to $ 1500. I would have the installing contractor fax you a copy of the Model and Serial numbers for the heat pump, along with a description of the type of installation, as well as the efficiency. They should be able to find these through the Preston’s Guide, if the contractor is worth their salt.

    Hope this helps :)

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