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Now Might be a Good Time to Replace Your Heating System

by LiveModern Webmaster last modified Jan 04, 2012 02:11 AM
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by Alex Wilson last modified Apr 27, 2010

If your heating system is old and inefficient, now is a great time to replace it with a new, high-efficiency model. There are eight months remaining to take advantage of the 30% federal tax credit that's available for installing energy-efficient ga... Be aware that these are really stringent standards; not all manufacturers offer eligible products. Very few oil-fired boilers or furnaces meet the 90% AFUE threshold, and 95% is pretty rigorous for gas furnaces. Air-source heat pumps, must meet specific requirements for HSPF, EER, and SEER (all specific measures of energy performance). Standard (packaged) air-source heat pumps must achieve the following: HSPF at least 8.0, EER at least 12.0, and SEER at least 14.0. "Ductless mini-split" systems, which are growing rapidly in popularity, must achieve somewhat higher performance: HSPF at least 8.5, EER at least 12.5, and SEER at least 15.0. To earn the federal tax credit for one of these systems, the installation has to be completed by December 31, 2010. You have to use IRS Form 5695 and also provide a "Manufacturer's Certification Statement" certifying that the furnace, boiler, or heat pump qualifies for the tax credit. This statement should be available from the installer or manufacturer. This tax credit--unlike the solar and ground-source heat pump tax credits--only applies to a home that you own and that serves as your principal residence. The residence can be a house, mobile home, manufactured home, co-op apartment, or condominium. You cannot take advantage of this tax credit for heating system replacement on a second home or rental property. Tax credits are much better than deductions, because they directly reduce the taxes you are paying, rather than reducing your taxable income. If you are in a 25% tax bracket, for example, a $1,500 tax credit is comparable to a deduction of $6,000. Only one $1,500 tax credit can be earned for energy efficiency improvements, so if you already took advantage of this tax credit on your 2009 taxes, you are ineligible. While you will earn a tax credit, the real benefit from replacing an inefficient heating system with a new, more efficient one, will be the energy savings that result. If you're spending $2,000 per year on heat today using a gas furnace with a 78% AFUE efficiency, and you replace it with a 95% AFUE model, you should save about $360/year on fuel (calculated using BuildingGreen's Fuel Cost Calculator ). If the cost of the new furnace was $5,000 ($3,500 after the tax credit), the simple "return on investment" is 10.3%--not a bad return, compared with what you would earn with that money sitting in the bank! The bottom line: if your current heating system is getting old or is inefficient, this summer is a great time to replace it. Contact your heating contractor and/or other suppliers about eligible products. A great resource for information on both federal and state incentives for efficiency and renewable energy is the Database of State Incentives for Renewables and Efficiency (DSIRE) . I invite you to share comments on this blog. Alex Wilson is the executive editor of Environmental Building News and founder of BuildingGreen, LLC. To keep up with his latest articles and musings, you can sign up for his Twitter feeds . Image: The York Affinity YP9C gas furnace features a modulating burner and variable-speed drive, both of which contribute to the industry-leading 98% AFUE performance. Source: York/Johnson Controls.






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