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Federal Tax Incentives

Take advantage of Federal Tax Incentives before December 31, 2007

Thinking about upgrading your heating and/or air conditioning equipment? The Energy Policy Act of 2005 allows for tax credits and tax deductions for installation and use of several different energy efficient products and technologies, including tax incentives for consumers, businesses, home builders, appliance manufacturers, and commercial buildings.

Tax credits for home owners apply to improvements made to a primary residence from January 1, 2006 through December 31, 2007.

The 2009-2010 Energy Tax Credit

With the passage of President Obama’s Economic Stimulus Bill, homeowners may be eligible for a tax credit if they purchase certain types of heating, ventilation and air conditioning (HVAC) systems, water heating equipment, or make other energy-related improvements to their homes between January 1, 2009 and December 31, 2010.

As a leader in enabling homeowners to take control of their own energy management, O’Neill Contracting and Trane already offers systems that may help you save up to 60 percent on your energy bill.1 To add to that savings, O’Neill Contracting and Trane offers many products that are eligible under this new energy tax credit law. Depending on the type of system or product purchased, it is possible to qualify for a tax credit of up to $1,500 on your 2009 or 2010 income tax return. Read on to learn how the government’s new tax credit program works, which products qualify, and how to apply for a tax credit.

How did the tax credit come about?

On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (also known as the Economic Stimulus Bill) into law. This legislation combines spending and tax incentives designed to get the American economy moving again by investing in our nation’s roads and energy infrastructure, and by providing incentives for increasing the efficiency and performance of America’s homes and commercial buildings.

Which products are eligible?

Some — but not all — products may qualify for the tax credit. Contact O’Neill Contracting at 201-385-6727 and we can help you.

How do I apply for a tax credit?

For qualified improvements, homeowners may be able to claim tax credits equal to 30 percent of the installed costs (up to $1,500). The new tax credits are retroactive to January 1, 2009 and expire on December 31, 2010. The $1,500 limit is for all improvements made during the two-year term, rather than $1,500 each year.

The tax credit applies as a direct reduction of taxes owed. In the past, IRS has directed taxpayers to use Form 5695 (the Residential Energy Efficient Property Credit). It is expected that the IRS will produce new rules related to the recently enacted stimulus legislation, giving taxpayers further guidance on claiming tax credits. To fully understand how the new tax credit may apply to you and what you can do to obtain one, you should consult with a tax professional for advice on tax preparation, as this tax credit is subject to IRS regulations.

1 Potential energy reduction comparing an 8-SEER system to a 20-SEER system. Actual energy savings vary based on lifestyle, system settings, maintenance, climate and installation