There is a lot of confusion about what qualifies for the federal tax credit when it comes to air conditioning equipment. The Federal tax credit is just what the name implies a “Tax Credit”. It is not a deduction which would give you less money back in your pocket. The stipulations are that you must replace your entire air conditioning system, not just a piece of it, and the new system must meet the minimum efficiency ratings set up by the federal government. For a Heat Pump System it must have an SEER of 15 an EER of 12.5 and an HSPF of 8.5. All of these are efficiency ratings related to air conditioning and heat pumps. For a non-heat pump system the SEER goes up to 16 and the EER goes to 13. The governing body that keeps up with the ratings of all the equipment match ups is the Air Conditioning Heating and Refrigeration Institute (AHRI).
Be careful when purchasing an air conditioning or Heat Pump system that other companies say qualify. The manufactures are all trying to get as many match ups that qualify and in many cases they are oversizing the inside coils to get more SEER rating and this is really bad for humidity control. It takes more energy to remove water from the air than it does to just drop the temperature, so if you remove less water you can get a higher SEER rating. The problem is your home stays much more humid and you tend to turn the temperature down colder to try and feel comfortable. This actually causes the unit to consume more energy and negates the added efficiency. If you lived in Arizona or a very dry climate this would be fine, but not in a humid climate like ours.
Another concern about the tax credit is that you can only claim a total of $1500 combined for 2009 and 2010. If you claimed any of the tax credit in 2009 then you will be limited on what you can claim in 2010. The tax credit is 30% of the cost for the qualifying energy saving measure up to a total of $1500. Attic insulation and other high efficiency appliances also can qualify.
In order to get the Tax Credit you must actually owe taxes on your return. If your tax liabilty is less than $1500 total then the maximum you can get is whatever your tax liabilty is. You should consult your tax preparer or CPA for advice and to see if you qualify.
