Are You Eligible for an Air Conditioning Tax Credit?

If you have an air conditioning system in your home, you may be eligible for a federal tax credit. If your home system meets the requirements, a tax credit consisting of 30 percent of the cost up to $1,500 is in order. Meeting the requirements, though, is the condition of receiving this tax credit. Don't assume that because you purchase a new air conditioner that you will automatically be eligible. The type of home, where you live and the type of unit you purchase all factor into the determination of eligibility.

Tax Credit Eligibility in General

Firstly, you must own your home. Renters are not allowed this tax credit. Secondly, it must be an existing home and your principal residence. In other words, newly built homes do not qualify, and if you own an existing beach house but do not live there full time, installing an energy-saving air conditioner or other appliance will not earn you the tax credit.

Tax Credit Eligibility Specific to Air Conditioners

After determining if you meet the general eligibility requirements for the tax credit, you must then meet the requirements specifically designated for air conditioners. Not all air conditioners will pass the test, so before you deduct the amount of the credit for your adjusted gross income, be certain your home air conditioning unit qualifies.

A qualifying home air conditioner must be a CAC or central air conditioning unit. Window or portable units do not qualify. Both split and package system central air conditioning units may qualify depending on their energy efficiency. Split systems have 3 parts including an outdoor condenser and compressor contained in a metal cabinet, an indoor evaporator coil and an air handler contained within the furnace that propels cool air through the home's ductwork. Package systems contain all of these components in a single location.

EER and SEER Requirements

EER stands for Energy Efficiency Ratio. SEER stands for Seasonal Energy Efficiency Ratio. The higher the number, the more energy efficient the air conditioner is. These requirements differ between split and package systems. Split systems must possess an EER of 13 or greater, while the SEER must be 16 or higher. For package systems, the EER must be 12 or higher and the SEER 14 or higher.

Split System

If you have a split system air conditioning unit in place which many homeowners do, there is the added condition of having an energy saving heater in place as well. Because split systems rely upon the heater's air handler to push the cool air through the home, that component will most likely have to energy efficient as well in order to meet the EER and SEER requirements. Talk to the HVAC installer with any questions you may have about eligibility for the tax credit. If they cannot help you, consult the manufacturer website for the answers.

If you your home central air conditioning system meets the requirements, you are eligible for a federal tax credit to the tune of 30% of the purchase price including installation. The limit is $1,500 but that is still a sizable chunk that is taken off of your tax return's AGI.