The Inflation Reduction Act of 2022 has ushered in a new era of energy efficiency, offering federal tax credits and deductions to incentivize Americans to embrace sustainable practices in their homes and buildings. This comprehensive guide equips new homeowners with essential information to make informed decisions and maximize savings.

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Tax Credits for Home Builders and Homeowners:

Builders and homeowners alike can benefit from the legislation, which promotes energy-efficient initiatives across the board.

 

Savings Potential:

Through 2032, homeowners can save up to $3,200 annually on taxes, with credits covering up to 30% of energy-efficient upgrade costs.

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Residential Clean Energy Credit: Important**

Before purchasing your new HVAC system, ensure the HVAC installation company provides proof from EnergyStar.gov, confirming system eligibility. Obtain a printable AHRI certificate for records. Beware of misinformation; qualifying systems on Energy Star's website may have tonnage limitations.

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Air Conditioners:

For new homeowners, upgrading to energy-efficient air conditioners is a wise investment. You can save up to $600 on upgrade costs, covering 30% of expenses, search for qualifying systems here.

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Heat Pumps:

Heat pump technology offers efficient heating and cooling solutions. Save up to $2,000 on heat pump upgrade costs, covering 30% of expenses, search for qualifying systems here.

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High Efficiency Gas Furnaces:

Heat pump technology offers efficient heating and cooling solutions. Save up to $600 on heat pump upgrade costs, covering 30% of expenses, search for qualifying systems here.

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Step-by-Step Guide to Claiming Your HVAC Tax Credit:

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1. Get a Quote: Request quotes from reputable HVAC companies, emphasizing your interest in the federal tax credit during the consultation.

2. Verify System Eligibility: Once you've selected a system that fits your needs and budget, before committing, ask the HVAC company for the AHRI certificate and proof from EnergyStar.gov that the system qualifies. Pay attention to tonnage limitations and ensure full model numbers are listed on your estimate or quote for verification, view example AHRI document here.

3. Confirm Qualifications and Accept Offer: After confirming that the system qualifies, accept the offer from the installation company at your convenience. Ensure all necessary documentation is provided and stored safely.

4. Installation and Documentation: Once the system is installed, keep the AHRI certificate and "paid" receipt from the installation company in a secure place until tax time.

5. Tax Filing: When meeting with your CPA, inform them that you've installed a new HVAC system eligible for the federal clean energy tax credit. Your CPA should file an IRS Form 5695 on your behalf. If you do your taxes yourself, obtain the necessary IRS forms below.

6. Enjoy Your Savings: Sit back and enjoy your federal tax credit, knowing you've made a smart investment in both your home's comfort and energy efficiency.

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• If you need instructions on filing the IRS Form 5695, [view PDF]

• If you need IRS Form 5695 (2023- 2032), [view PDF]

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By following these simple steps, you can confidently navigate the process of claiming a federal tax credit for your HVAC system upgrade. Don't miss out on this opportunity to maximize your savings and enjoy the benefits of a more energy-efficient home.