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Let Your Tax Return Help You With System Replacement

Tax Credit - Masters Heating and CoolingDoes your home’s aging or inefficient cooling and heating system need to be replaced? If so, making that move now could save you some money and make it more affordable than ever to buy a new system, especially if you plan to use your income tax refund on the purchase.

The Residential Energy Efficiency Tax Credit was recently renewed by lawmakers. This means that retroactively from January 1, 2015 through December 31, 2016, qualified equipment installed in 2015 or 2016 may be eligible for up to a $500 total tax credit. So, if you are one of those folks who are expecting a nice return to use towards financing a new HVAC system, this is big news for you.

According to information at, the following are some eligibility requirements and additional details of the tax credit:

  • Efficiency improvements or equipment must serve a dwelling in the United States that is owned and used by the taxpayer as a primary residence.
  • The credit applies to the purchase of high-efficiency heating, cooling and water-heating equipment.
  • Tax credit is 10% of cost up to $500 or a specific amount from $50-$300. The maximum tax credit for all improvements is $500.
  • If tax credits of $500 were made in previous years, any purchases made in 2011-16 will be ineligible.
  • High-efficiency heating, cooling and water-heating equipment eligible for tax credits, and their credit caps include:
    • Natural gas, propane, or oil furnace or hot water boiler with an annual fuel utilization rate of 95 or greater: $150
    • Electric heat pump water heater with an energy factor of at least 2.0: $300
    • Electric heat pump that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
    • Central air conditioner that achieves the highest efficiency tier established by the Consortium for Energy Efficiency: $300
    • Natural gas, propane, or oil water heater that has either an energy factor of at least 0.82 or a thermal efficiency of at least 90%: $300
    • Geothermal heat pumps up to 30% of cost with no cap.
    • Biomass stoves that use “plant-derived fuel available on a renewable or recurring basis, including agricultural crops and trees, wood and wood waste and residues (including wood pellets), plants (including aquatic plants), grasses, residues, and fibers.” Systems must have a thermal efficiency rating of at least 75% to qualify: $300.

As is always the case, replacing your old system is most times better than footing the bill for costly repairs which may be just a short-term fix. And it’s also always a good idea to take the proactive approach and replace your old system before it breaks down and leaves you in crisis mode. Reduced utility bills are also a good reason to invest in a new system.

So, if the time is right for you to replace your old system, call Masters Heating & Cooling today for more details. To find out how to apply for the tax credit, click here.

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