The Energy Policy Act of 2005 contains a number of provisions for the residential and commercial heating and air conditioning industry.  Energy efficient home improvements meeting specific requirements will qualify for federal tax credits of up to $500.00, providing that the improvements are made between January 1, 2006 and December 31, 2007.  Unlike tax deductions, tax credits are a dollar for dollar reduction of a homeowner’s federal tax liability, and as a result they should be viewed as a reduction of the investment in new high efficiency heating and/or cooling equipment.  Since other home improvements such as windows, roofing, and insulation are included in this legislation, it is important to inform prospective customers that the maximum credit per residence cannot exceed $500.00.  A preliminary list of qualifying HVAC products is as follows:

Clarification of qualify products and services is the responsibility of the Internal Revenue Service and as of this time, they have not made a final ruling.  This is an important point to cover  with all perspective clients.  Updates will be posted at www.energystar.gov or www.energy.gov when they become available.  Additionally, some states have also enacted energy legislation that will result in available rebates and /or tax incentives.  Check with your state’s energy office web sit to access these programs.

Home builder tax credits of $2000.00 are available and all residential new construction deals should discuss them with the general contractors they work with.  There are also tax credits for owner or designers of new or existing commercial buildings.  The qualifications for both of these incentives are more detailed; specific information is available at the web sites mentioned above.