Time is rapidly running out for you to take advantage of a tax credit for installing a tankless water heating system. The Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 signed by President Obama on December 17, 2010, extended tax credits for qualifying energy-efficient, residential water heaters and boilers placed in service between January 1, 2011, and December 31, 2011. The structure is similar to the 2009-2010 American Recovery and Reinvestment Act, however, the credit amount has changed. Water heaters are still required to have an energy factor >= 0.82 or a thermal efficiency >= 90%, and boilers must have an AFUE >= 95. The tankless water heater or boiler must be installed in or on the taxpayer’s principal residence in the United States. The tax credit is ONLY available for existing homes.
How to claim your tax credit for 2011
For qualified improvements, homeowners may be able to claim tax credits equal to 10 percent of the installed costs (up to $500 maximum). The extended tax credit is in effect for all qualifying systems and products installed during the 2011 calendar year and expires on December 31, 2011.
The tax credit applies as a direct reduction of taxes owed. In the past, the IRS has directed taxpayers to use Form 5695 (the Residential Energy Efficient Property Credit). It is expected that the IRS will produce new rules related to the recently enacted stimulus legislation, giving taxpayers further guidance on claiming tax credits. To fully understand how the new tax credit may apply to you and what you can do to obtain one, you should consult with a tax professional. Subject to IRS regulations. Customers should consult a tax professional for advice on tax preparation. Qualified products or systems installed during 2009 and 2010 may also qualify for a tax credit equal to 30 percent of the installed costs (up to $1,500).
Again, the heating, cooling, water heater, or boiler equipment or system must be placed in service between January 1, 2011 and December 31, 2011. The IRS defines “placed in service” as when the product is ready and available for use. The heating, furnace, air conditioner, water heater, tankless water heater, or boiler must be installed in or on the taxpayer’s principal residence in the United States. For more information or to schedule a tankless water heater installation, please call Feehan Plumbing & Heating at (610) 795-9327.