Replacing heating equipment doesn’t have to deplete your household budgets. Energy-star rated equipment might initially bite into your budget but the fuel savings coupled with federal tax incentives often make up for the higher costs.
While the federal tax credit expired on Dec. 31, 2011, products you purchased in 2011 might still qualify for some incentives. Back in January 2011, a $500 lifetime tax credit limit was established. What this means is if you received any tax credits from 2006 – 2010, those amounts count toward your lifetime limit. For example: you got a $300 rebate back in 2007, then you are still eligible for $200 before you hit your limit. These tax credits can be for any number of items as long as they stay under that $500 limit.
So, what heating system equipment can earn you free money? Here’s a sample list:
- Circulating fans: efficient fans that blow the heated air through your duct system using less than 2 percent of the furnace’s total energy.
- Heat pumps: energy-efficient alternatives to furnaces that move heat rather than generating heat.
- Water boilers: gas, propane or oil systems that circulate warm water throughout the home.
Make sure you file the 2011 version of IRS form 5695 along with your 1040 to receive your tax credit.
Be aware that some products, such as geothermal heat pumps, solar panels and wind generators, are eligible for a separate 30% tax credit with no upper limit until 2016. Just another way your heating system will put cash back into your wallet while you lounge in your toasty warm home.