Heating Systems And Taxes - Nothing is Certain But?

Heating Systems, Energy Efficiency, and Taxes

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Heating Systems, The EPA & Energy Star

Before the massive, green wave of energy efficiency came careening through our culture, Congress made proactive movements to entice America’s homeowners and manufacturers to heighten their awareness of power usage. In order to reduce waste on electronics, cars, heating systems and other home appliances, this energy saving mindset began its legislative bloom in the early 1990s with the Environmental Protection Agency’s Energy Star program, which has become an exemplary building block for today’s recovering economy. As more and more people are turning to greener options for their homes, they’re seeing heating costs going down, tax breaks coming in, and energy savings going up.

Taxes Make A Break For It

In late 2010, President Obama signed an extension of the American Recovery & Reinvestment Act of 2009, which not only aimed to spur the economy forward, but also pushed back the expiration dates of tax incentives for upgrading to up-to-date appliances, encouraging homeowners to continue their endeavors in energy efficiency.

From 2009-2010, tax credits for energy efficiency jumped drastically, the lifetime cap for credit breaks tripling from $500 to $1,500 and the percentage of total cost reimbursed for home efficiency improvement going from 10% to 30%. The recent extension of the American Recovery & Reinvestment Act is actually reverting the standards of the law as it stood from 2005-2008, offering to pay 10% of total upgrade cost (up to $500), or a specific amount from $50 - $300 (depending on the product purchased). These products include gas, propane or hot water boilers, gas, oil or propane furnaces, heat pumps, and biomass stoves. The efficiency requirements for heating systems to qualify for the tax credits are also stricter: furnaces and boilers must have an Annual Fuel Utilization Efficiency (AFUE) rating greater than or equal to 95, no longer 90, as it has been for the past years.

For the adventurous householders who are willing to take an extra step to upgrade to more advanced alternatives for home heating systems, credit offered remains at 30% of total upgrade cost furnished, with no upper limit, whether the home is existing, a new construction, the principal residency or a second home. These upgrades include geothermal heat pumps, residential wind turbines, and solar energy systems.

In 2009, the initial passing of the act ushered in a spike of interest in energy efficiency tax credits. People started searching for avenues to cash in on their already improved heating costs, and that is still evident today. Studying trends that extend from 2007 to 2011, we can see that this interest has been steadfastly maintained (Google Insights for Search). Though the rules are a touch tougher and the credits are a bit tighter, the spirit of the extension is still to advocate a simultaneously proficient use of fuel and money. Offering greater incentives for homeowners who make costlier improvements to their properties is a safely bold step to stimulate a vaster view of exactly what kind of upgrades can be made.

The Efficient Future of Heating Systems

This continual support of energy efficient homes may eventually prove to make more resources available that will render future heating costs even lower. The days of solar home heating and geothermal heat pumps aren’t quite around the corner, but they are definitely becoming viable options for people looking to upgrade from outdated furnaces or boilers. These monetarily stifling options aren’t the only ones on the table though.

Homeowners need not worry when they hear of changing heating systems and fluctuating tax write-off requirements – converting every home over to solar panels and heat pumps is not necessarily the answer to the question of low heating costs and high efficiency ratings. More attainable efficiency ratings apply more commonly to the modernization of old systems – that is, you replace your old heater for a new one with a higher AFUE rating.

Electric furnaces tend to be the least expensive to replace, but relatively fall short when you consider long-term usage and the price of electricity. Gas furnaces are generally the most common home heating system employed, so more Earth-friendly natural gas options will be available from your local HVAC contractor. The common furnace doesn’t mean the right one, though, and it might not mean it’s the cheapest, initially. With prices varying on efficiency ratings, gas and oil furnaces will run anywhere from $1,500 to $5,000 at the outset.

The most valuable thing for the homeowners to remember when they are looking to upgrade their furnaces for efficiency is to find the right set up for their specific homes. Investing in a high-efficiency heater will usually positively affect monthly heating costs, but for homes in milder climates that do not require constant heating, this could prove to be monetarily inefficient. A professional, knowledgeable contractor will be able to answer important questions about furnace size, fuel type, climate variances, and generally help residents along with home heating estimates. In the end, seeking the help of a trustworthy, local contractor is the easiest first step towards the right fit for lowering heating costs, getting your tax break, and ultimately, greener living.

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