Tuesday, 12 December 2017


Contact Us Today

1831 Austin Drive
Troy, MI 48083
Oakland County, US

Phone:  1-248-669-4338
Fax: 1-248-669-3495

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Tax Incentive

The American Recovery and Reinvestment Act of 2009 has tipped the scales in the direction of the homeowner in every way.  A 30% tax credit is being offered with a cap of $1500 on qualifying products.  The furnace must meet or exceed 95% fuel efficiency and the A/C must meet or exceed 16 SEER.  What does this really mean for you? 

Traditionally, we base our purchase decision by figuring the cost of the upgrade option from the base job price.  From there we forecast the energy savings based on the more efficient equipment and figure approximately how long it will take for the savings to pay for the upgrade.  At this point the average homeowner will consider "how long will I be here" and make their decision.

THE TAX CREDIT HAS SLID THE SCALE IN THE FAVOR OF THE HOMEOWNER

EXAMPLE:  You decide to replace your heating and air conditioning system and are pricing different options.  You decide that a 90% furnace and a 13 SEER air conditioner is your base and are given a price of $4500 to install the job.  Moving right to the premium option would mean a 95% 2 stage with a variable speed blower and a 16 SEER two speed condenser.  This premium option installed costs $7000.  That's an increase of $2500.  Looking at your old utility bills you determine that you paid $2500 to heat and cool your home last year.  Considering your new system may be 30% more efficient (depending on your old system), that amounts to $750 a year in savings.  That means that it would take three and a half years to pay for the upgrade.  Now, consider the tax credit at 30% for the total job caps and you receive the full $1500.  That knocks your increase down to $1000 instead of $2500.  Recalculate your savings based on efficiency and that upgrade will pay for itself in less than one and a half years. 

THE HIDDEN BENEFIT:  So much focus is placed on the efficiency of a system and the payback period.  Do not forget that the upgraded equipment is more reliable, operates smoother and quieter, and usually comes with a much better warranty.

THE BOTTOM LINE:  The tax credit has made it possible for homeowners to get into premium systems when they could not otherwise.  For homeowners to take advantage of this program, the job must be installed and invoiced before 2010 ends - take advantage of this opportunity now.

BEWARE:  Any contractor can say that you will get the tax credit.  We strongly recommend that you educate yourselves.  All the details are available at energystar.gov.  It is very important that you receive an ARI # that qualifies your products.  Tax code can be very confusing, please look to the above website for clarity.