Q&A on Energy-Efficient Tax Credits

Just two months from now, it’s time to pay the taxman once again – but for some homeowners, there may be a new way to cut the bill. The government legislation that avoided the so-called fiscal cliff included a provision that retroactively reinstated 25C Tax Credits for residential energy efficiency home improvements (up to $500 on the installed cost.) The credit applied to purchases made in 2012, as well as for future purchases in 2013. The credit previously expired December 31, 2011.

Service Experts, North America’s largest HVAC service company, has provided a recap of frequently asked questions and answers on the 25C Residential Energy Tax Credit (HVAC Tax Credits).

Q.  What purchases do the tax credits apply to?

The tax credit applies for qualifying new; water heaters, furnaces, boilers, heat pumps, central air conditioners, building insulation, windows, roofs, circulating fans used in a qualifying furnace, and stoves that use qualified biomass fuel

Q.  What are the applicable purchase dates to redeem the credit?

The credits were made retroactive to January 1, 2012 and apply to qualifying equipment installed any time after December 31, 2011 through December 31, 2013.

Q.  What are the household qualifications?

The home must be the taxpayer’s primary residence to qualify.

Q.  How much is the tax credit for?

For purchases made in 2011, 2012, and 2013, the total amount for all three years is limited to $500. Taxpayers are ineligible for this tax credit if the credit was claimed in an amount of $500 in any previous year.

Q.  How do I claim the tax credit?

File IRS Form 5695 with your 2012 and 2013 federal tax return. (Service Experts has the form available for download at:


Most major tax software providers should include the form in their tax return process, but check to make sure. Also make sure your CPA knows about all your home improvement purchases to receive all the applicable tax benefits.

Q.  When does the tax credit expire?

The energy efficiency home improvement tax credit will expire on December 31, 2013 unless reinstated again by the government.

Q. What heating and air equipment qualifies for a tax credit?

Only specific models meet the specified minimum efficiency requirements to qualify for the tax credit. Service Experts Heating & Air Conditioning provides a detailed breakdown at: