Currently, the government is so interested in economic rehabilitation and environmental issues that it is offering tax credits to homeowners who install energy efficient appliances, windows, and even insulation. Besides saving money by getting a bigger tax rebate – or, at least, paying less in taxes – this year, you can save money over the long term on your overall energy costs.
What is Eligible for the Tax Credit
Until the end of next year, you can spend money replacing your windows, insulation, roof, doors, and heating and cooling equipment with better, more efficient models, and the government will refund thirty percent of your costs up to $1,500. This can add up to a lot of savings, especially if you need to replace both your furnace and your air conditioning unit.
What’s more, if you replace your old heating and cooling system with a geothermal heat pump, which actually uses the earth’s heat in the winter and dumps heat out of the home into the earth in the summer, you can save 30% of the total cost without any limits. Combine this with specials that many heating and cooling companies are already running, and you can save some major cash.
How does it Work?
Basically, you’ll need to keep your receipts. At the end of the year when you’re itemizing your tax breaks, you’ll file for this rebate. The best part about a tax credit – as opposed to the normal tax deduction that you’ll get for charitable giving and the like – is that it’s a dollar-for-dollar deal.
This means that if you spend $5,000 on a new heating and cooling system for your home, you can apply for the full $1,500 tax credit. If you end up getting a tax rebate, the government will send you an extra $1,500, and if you owed the government, say, $2,000 at the end of the year, you would only have to pay $500 of that because your tax credit would offset the rest.
Not the Only Way to Save
Besides the tax credit, though, installing a new energy-efficient heating and cooling system in your home can save you money in repair costs and energy costs. If you current system is more than a decade old, chances are likely that it’s going to start having some major problems within the next few years, and paying to fix these issues can take a huge chunk of change. Newer systems will need fewer repairs, and they’ll probably be covered by warranties for a while, making them a safe investment.
Today’s technology in heating and cooling can save you hundreds or thousands of dollars a year in heating and cooling costs. If you live in a very cold area, a 90% efficient furnace could save you an average of $1,600 per year, and a very efficient air conditioning system in a hot area can do the same. You really can’t go wrong with this deal.
