Tax Credits, Your Customers, and You

September 13, 2010
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Know your tax credit products! Units in the WaterFurnace Envision™ Series (above), for example, meet or exceed Energy Star performance guidelines and reduce annual costs for heating, cooling and hot water by as much as 70 percent.



Today, homeowners face often-complicated questions regarding a variety of tax credits, utility rebates, and manufacturer incentives. As energy prices and utility bills increase, they want recommendations for energy-efficient solutions that will also meet the requirements for tax credits and rebates. In the search for answers, homeowners are bringing many of these questions to their HVAC contractor.

For contractors, this means assuming the expanded role of energy efficiency expert and also helping customers take advantage of tax credit and rebate programs - not necessarily an easy task. To meet this new challenge, it is important for contractors to keep abreast of utility rebate programs by maintaining good communications and relationships with local utilities.

Manufacturers can also help by certifying that their systems meet the requirements for tax credits. A list of those products that qualify for tax credits can be a useful tool for contractors, especially as they work with homeowners to select new HVAC systems. Manufacturers like WaterFurnace, for example, provide a complete list of products that meet the federal tax credit requirements and offer detailed information about the tax credit program. Contractors can also go to the company’s website to find forms and information that will be helpful to their customers.

The American Recovery and Reinvestment Act of 2009 offers consumers who purchase and install energy-efficient heating and cooling equipment in existing homes a tax credit of 30 percent of the cost, up to $1,500, for improvements installed between Jan. 1, 2009, and Dec. 31, 2010. To earn this federal tax credit, oil furnaces must have a minimum AFUE of 90, while natural gas and propane furnaces require a minimum AFUE of 95. For homeowners hoping to earn tax credits for new air conditioners, they need to purchase units with a minimum SEER of 16.

Eco-conscious consumers are also looking for environmentally friendly alternatives to traditional heating and cooling systems that offer higher efficiency and smaller carbon footprints. Federal, and some state and local governments are offering tax incentives, and in some cases local electric utilities offer rebates to homeowners who install renewable energy systems like solar or geothermal. In addition, some geothermal manufacturers offer dealer financing plans to help make the systems even more attractive and affordable.

Homeowners who install a geothermal heat pump receive a one-time renewable energy tax credit of 30 percent of the total investment through Dec. 31, 2016. A credit of 10 percent of the total investment is also available for a commercial system installation.

These incentives, when combined with other state tax credits and utility rebates, make geothermal systems more accessible to homeowners and increase sales opportunities for the contractors who sell and install them.

“The rebate program is definitely attractive to homeowners. But it is also attractive from a manufacturer and dealer perspective,” said Tim Litton, manager of advertising and creative at WaterFurnace.

“When sales are slower in the HVAC industry, contractors look for ways to generate more sales,” he said. “This program allows dealers to offer an even more efficient system to customers who are interested in energy efficiency, and it creates sales opportunities in the process.”

In addition to lists of eligible products provided by manufacturers, the Energy Star® logo helps contractors identify equipment that qualifies for tax credits and rebates. The tax code requires eligible equipment to satisfy efficiency ratings or meet Energy Star requirements. For contractors, complying with this code also means complying with what the tax code says about a particular brand or component.

EDUCATION

To help homeowners learn about tax credits and rebate programs, many contractors are dedicating a section of their websites to eligible products and important information regarding the tax credits that are associated with them.

“HVAC contractors have to answer all their customers’ questions regarding the equipment, tax credits, and rebates to help them make informed decisions on the best equipment for heating and cooling their homes,” said Litton. “As a result, contractors need to be educated on incentives for all types of heating and cooling equipment.

“We, as manufacturers, can help by providing appropriate information about products that qualify for these incentives, thereby making it easier for contractors to share information with their customers.”

Publication date: 09/13/2010

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