Unfortunately, most of the tax credits for making energy-efficient improvements to your home, such as installing a new furnace, are no longer available.
The Energy Tax Incentives Act of 2005 provided tax credits for a variety of energy-saving home improvements, such as installing new windows, water heaters, and furnaces. Unfortunately, these tax credits expired at the end of 2011. However, there are still a few energy tax credits that are available through 2016 for the installation of larger, more costly energy-saving systems, such as geothermal heat pumps and solar energy systems.
Even though the furnace-related energy tax credit is no longer available, you may still be able to save money on the installation of your furnace. Check to see if rebates for energy-saving home improvements are offered through your utility company or your state or local municipality. You can go to www.energy.gov for more information.
While the rebates may not equal the expired tax credits in terms of cost savings, they often provide incentives of up to a few hundred dollars per installation. When applying for an energy rebate, consider the following:
• Energy rebates usually require the product to be ENERGY STAR certified
• The amount of the rebate may hinge on the energy efficiency of the product (e.g., a furnace that has a higher efficiency will be eligible for a larger rebate)
• The rebate may only be available for products that have been installed by a certified contractor
• You may have to apply for the rebate within a certain time period after the installation of your energy-saving product
Finally, keep in mind that even though you missed out on the financial benefits of a tax credit, installing a more energy-efficient furnace can end up saving you money in the long run. According to the U.S. Department of Energy, installing a higher-efficiency heating system along with making energy-efficient upgrades can often result in cutting your winter home heating costs in half.
Prepared by Broadridge Investor Communication Solutions, Inc. Copyright 2012