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New Federal Tax Credit Opportunities For 2013

As part of not falling over the “fiscal cliff,” Congress extended the life of some tax credits for 2011 that could help reduce the cost of buying and installing high-efficiency heating and cooling appliances, including water heaters, furnaces, boilers, air conditioners, heat pumps and advanced main circulating fans.

These federal tax credits originally expired at the end of 2011, so if you installed a qualifying product in 2012, Congress has provided the opportunity to claim tax credits for your qualifying purchases. The catch, of course, is that the forms you need to file along with your 2012 income tax return won’t be ready until March, so if you like to file your taxes early, you’ll either have to wait, or amend your return later to get the credit. There has been some talk of making these tax credits permanent, however Congress has extended the credit only through December 31, 2013.

Qualified hot water heating products, which are eligible for a credit of $300, include those that operate on natural gas, liquid propane or oil and have an energy factor of .82 or better or a thermal efficiency of at least 90%. Typically, tank-storage domestic hot water systems don’t meet this efficiency rating. Instead, the types of hot water systems that will qualify for this are tankless, on-demand systems. Tankless systems are more expensive than traditional tank-based appliances, but they’re rated for a longer life (typically about 20 years) and will save money in the long run because they’re more efficient and you won’t replace them like you will replace a tank-based system.

If you need to replace your water heater and you don’t want to go in for a tankless system, there are still many tank models that can save money and perform well over time. Look for an EnergyStar-compliant model, and if you can swing it, look for a tank with a longer warranty.

Typically, a water heater will last at least through its warranty period. While a 6-year warranted tank is less expensive initially, you’ll buy two of them during the same time period you’d buy a tank with a 12-year warranty. If a 6-year tank is $450, over twelve years, you’ll spend $900 on tanks, plus the cost of installation. In contrast, a 12-year tank may cost $650-$700, so minimally, you’d save $200-$250 by choosing a tank with a longer warranty.

Under this program, boilers and furnaces with an AFUE efficiency rating of 95% or better are eligible for a $150 tax credit. Eligible equipment must be fueled by natural gas, propane or oil.

Also eligible for a $300 credit are split-system central air conditioner systems with a SEER of 16, packaged central air conditioning units with a SEER of 14, split system electric heat pumps with a SEER of 15 and packaged electric heat pumps with a SEER of 14.

If you would like more information on these credits, and products that qualify for credit under this program, please contact us at Boston Standard Plumbing & Heating at (617) 288-2911. We’ll be happy to talk with you about products that qualify, as well as alternative, energy-saving products, oil-to-gas conversions, heat pumps and more!