How Oilheat equipment can pay you back!
On August 8, 2005 President Bush signed the Energy Policy Act of 2005, which offers tax credits for energy efficiency improvements made by homeowners on their existing principal residence.
The tax credit has two components:
- A credit for qualified energy-efficient heating equipment.
- A 10% credit for energy efficiency improvements to the building envelope (windows, exterior doors, insulation).
The total credit for all tax years cannot exceed $500 and no more than $200 of the credit can be used for expenditures on windows. The life of the improvements must be at least 5 years. The property must be placed in service after 12/31/05 and before 12/31/07.
Consumers can receive these tax credits on various energy efficiency and conservation measures in the home, such as:
- Up to $500 in credits on the amount spent to upgrade thermostats, caulk leaks or stop energy waste.
- Up to $300 credits for purchase of a highly efficient oil-fired water heater.
- Up to $150 for installation of a high-efficiency furnace.
In order to be eligible for the tax credit, heating and cooling equipment must meet specified measures of energy efficiency:
- Oil water heaters must have an energy factor (EF) of at least 0.80. This is about 20 percent more efficient than the current federal standard. Only some tankless water heaters currently reach this efficiency level.
- Oil furnaces and boilers must have at least a 95% annual fuel utilization efficiency (AFUE) to qualify for the $150 credit.
Look for the ENERGY STAR®
All equipment qualifying for federal tax credits also meet the requirements of ENERGY STAR
Note: Your municipal and state government may offer its own tax incentives for the purchase of energy efficient products.