New Air Conditioning & Tax Credits

[jd253]

I currently have a Lennox Furnace (G51MP-48C-110-01) in my home, and a Carrier AC unit (split system). My AC is going out and I'd consider using the tax credit to get an upgraded AC unit. Manual J estimates a 3.5 ton AC. Problem is, I'm confused as to how I would qualify for the tax credit. I called the IRS and it appears that the language in the tax credit has not been clearly defined (nor may it ever be). The IRS rules say that an AC unit can be installed by itself "as long as it qualifies on its own." I'm told that the AC and furnace together define the SEER/EER ratings so I'm not sure how to tell if the "AC qualifies on its own." To make things worse, it looks like my furnace is a commercial unit, so looking it up has been difficult. As an example, the Trane site requires Furnace & AC model numbers to print a certificate. Dealers in the area are as puzzled as I am.

Can anyone shed some light on this? Better yet, has anyone gone through this process and could possibly suggest some working combonations, or how to mix & match? Can I just buy a 3.5 Ton unit and use the AC's specs?

Any help would be appreciated.
Joe

[green jumper]

For an a/c system to meet the tax credit it has to be a matched and rated system through ahri, the matched system will have a refference number. If you have a furnace this is older 10years it will be highly unlikely that you will find a matched system that is efficent enough for the tax credit.

In that case replacing the furnace would be a necessity, depending on the climate it might make sense to upgrade to a 95% furnace to automatically qualify for the rebate and add on whatever a/c efficiency you want for your house. Only doing the numbers will tell you which one will benifit you most.

If you post the model # of your furnace i'm sure someone can see if there is anything that would qualify

[jd253]

Thanks, The furnace is a lennox, model G51MP-48C-110-01. It appears to be a commercial unit (not sure how that happened). Looks like a 92.6% efficiency unit. It looks like you do not have to have both units qualifying. The faqs from the energy star site clearly say that you can install a qualifying component with a non-qualifying one. (see the two links below).

http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5597&p_created=1236883932&p_sid=*61GeDBj&p_accessibility=0&p_redirect=&p_lva=5697&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX 3Jvd19jbnQ9MzYsMzYmcF9wcm9kcz0wJnBfY2F0cz0mcF9wdj0 mcF9jdj0mcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1hYyBhbmQga GVhdGVy&p_li=&p_topview=1

http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5833&p_created=1244838489&p_sid=*61GeDBj&p_accessibility=0&p_redirect=&p_lva=5697&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX 3Jvd19jbnQ9MTI2LDEyNiZwX3Byb2RzPTAmcF9jYXRzPSZwX3B 2PSZwX2N2PSZwX3BhZ2U9MSZwX3NlYXJjaF90ZXh0PXJlcGxhY 2UgaGVhdGluZyBhbmQgYWM*&p_li=&p_topview=1

[gary_g]

Thanks, The furnace is a lennox, model G51MP-48C-110-01. It appears to be a commercial unit (not sure how that happened). Looks like a 92.6% efficiency unit. It looks like you do not have to have both units qualifying. The faqs from the energy star site clearly say that you can install a qualifying component with a non-qualifying one. (see the two links below).

http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5597&p_created=1236883932&p_sid=*61GeDBj&p_accessibility=0&p_redirect=&p_lva=5697&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX 3Jvd19jbnQ9MzYsMzYmcF9wcm9kcz0wJnBfY2F0cz0mcF9wdj0 mcF9jdj0mcF9wYWdlPTEmcF9zZWFyY2hfdGV4dD1hYyBhbmQga GVhdGVy&p_li=&p_topview=1

http://energystar.custhelp.com/cgi-bin/energystar.cfg/php/enduser/std_adp.php?p_faqid=5833&p_created=1244838489&p_sid=*61GeDBj&p_accessibility=0&p_redirect=&p_lva=5697&p_sp=cF9zcmNoPTEmcF9zb3J0X2J5PSZwX2dyaWRzb3J0PSZwX 3Jvd19jbnQ9MTI2LDEyNiZwX3Byb2RzPTAmcF9jYXRzPSZwX3B 2PSZwX2N2PSZwX3BhZ2U9MSZwX3NlYXJjaF90ZXh0PXJlcGxhY 2UgaGVhdGluZyBhbmQgYWM*&p_li=&p_topview=1

A/C must meet both 16 SEER and 13 EER to qualify.

How are you going to get a manufacturers certificate (and AHRI Reference number) that states that your new a/c gets 16 SEER and 13 EER with your existing furnace? You won't be able to get a mfr's certificate.

You can claim the Tax Credit, just act confused if you're audited :)

Good luck.

[jd253]

Actually I only see where the IRS asks for the manufactures certificate. In fact, a call to the IRS revealed that there is really no wording behind the tax credit. If you look at the Lennox site, they just ask you to have your HVAC dealer certify that the new combo will be 16 SEER/13 EER to print the certificate. I have never seen a document where the IRS asks for the AHRI number (maybe somebody can direct me to that).

Can somebody tell me how the furnace affects the AC's SEER/EER? Is there a way to calculate what the SEER/EER will be with the existing equipment?

Thanks

[m kilgore]

First off the furnace you have is not a commercial unit. It is a Elite line furnace and we install them in houses.

The furnace would need to have a variable speed blower in order to get anything up to 16 SEER. These blowers use less energy and when coulped with the right A/C and coil will get a certain SEER. I have not been able to find a system that will qualify without some sort of ECM motor in the furnace.

[gary_g]

In fact, a call to the IRS revealed that there is really no wording behind the tax credit.

What does that mean?

[jd253]

I called the IRS. The rep said that the tax law has no details behind it - it is very vague. The law was enacted by Bush, and extended by Obama. Neither administration has put any specific language behind it, and he doubted that they ever would. That means that it would probably be open to interpretation. Apparently this is common.

[HVAC_James]

Our company tells our customers what rebate they will recieve. Contact a heating company and they should help. The rebates are designed to get the best energy efficent units into your home to minimize the energy consumption. The best option at this time is a new furnace 95+% efficent with the variable speed fan and heat pump option.

[jd253]

After examining the posts here, talking to the IRS, speaking to the manufactures, and scouring the internet, I have come to the conclusion that the rebates will technically only apply to high-end systems with the latest equipment. If you have a system more than a few years old without variable speed, you are out of luck. It's a shame because I don't think that is in keeping with the spirit of the tax credit. The tax credit should encourage a person to put in a higher efficiency unit by offsetting a significant part of the costs. In a typical AC only install or replacement, the credit doesn't even come close. For me, the AC replacement will be around $. The cost to meet the tax credit guidelines would be around $(requiring a new furnace that I don’t need), leaving a $difference. That doesn't even come close. HVAC dealers are going to have to explain this over and over to frustrated customers.

The credit was written by non-technical folks and I doubt that they fully understood what it takes to achieve the SEER levels specified. If one wanted to take the chance and submit a certificate for a single unit, I'll bet that would pass by an IRS audit - no problem. I seriously doubt if an IRS agent is going to evaluate the actual SEER rating of combined equipment. Heck, I'm an engineer, have written software for HVAC controls and I still don't understand it. Imagine a congressman grappling with this.
Thanks for feedback. I’m going to put in a 13 SEER AC unit and call it good. It’s just not worth the headache.

[gary_g]

If one wanted to take the chance and submit a certificate for a single unit, I'll bet that would pass by an IRS audit - no problem. I seriously doubt if an IRS agent is going to evaluate the actual SEER rating of combined equipment.

:)

[jerryd_2008]

Actually I only see where the IRS asks for the manufactures certificate. ... I have never seen a document where the IRS asks for the AHRI number (maybe somebody can direct me to that).

...

In other threads, posts have been made in regards to IRS Notice 2009-53 which can be read on the IRS Publications web site and is linked to from some FAQ on the Energy Star web site.

Regarding the "required manufacturer's certification" often stated in posts the IRS states (my bold/underline emphasis added-note that a central AC and heat pump meeting the right EER, SEER and HSPF is a "qualified energy property" defined in this IRS Notice):


01 Requirements Applicable to Manufacturer. The manufacturer of a building envelope component or energy property may certify to a taxpayer that the component is an eligible building envelope component or that the energy property is qualified energy property by providing the taxpayer with a certification statement that satisfies the requirements of sections 6.04, 6.05 and 6.06 of this notice. The certification statement may be provided by including a written copy of the statement with the packaging of the component or property, in printable form on the manufacturer’s website, or in any other manner that will permit the taxpayer to retain the certification statement for tax recordkeeping purposes.

Manufacturer's certification seems optional to me. Also don't see any stated requirement for the AHRI certification # although I have seen several manufacturer's certifications that do reference the applicable AHRI # (to cover their whatever, I suppose). Given that, I have taken the position with my contractor's distributor that I will not allow an install until somebody in authority, whether it be the manufacturer or the distributor, first provides me with a certificate.:rolleyes: He is investigating providing manufacturer's certification for 3rd party coils.

However, the IRS says (my bold emphasis added):


.02 Taxpayer Reliance. Except as provided in sections 6.03 and 6.08 of this notice, a taxpayer may rely on a manufacturer’s certification that a building envelope component is an eligible building envelope component or that energy property is qualified energy property. A taxpayer is not required to attach the certification statement to the return on which the credit is claimed. However, § 1.6001-1(a) of the Income Tax Regulations requires that a taxpayer maintain such books and records as are sufficient to establish the entitlement to, and amount of, any credit claimed by the taxpayer. Accordingly, a taxpayer claiming a credit for an eligible building envelope component or qualified energy property should retain the certification statement as part of the taxpayer’s records for purposes of § 1.6001-1(a).

Note that you do not have to attach the certification to your tax filing, apparently just keep in case the IRS audits you and you need proof. I have been saved only recently from both state and Federal auditors by having proof of my moves. May not have avoided the tax but it did avoid interest and penalties.

[teaysvalley]

After examining the posts here, talking to the IRS, speaking to the manufactures, and scouring the internet, I have come to the conclusion that the rebates will technically only apply to high-end systems with the latest equipment. If you have a system more than a few years old without variable speed, you are out of luck. It's a shame because I don't think that is in keeping with the spirit of the tax credit. The tax credit should encourage a person to put in a higher efficiency unit by offsetting a significant part of the costs. In a typical AC only install or replacement, the credit doesn't even come close. For me, the AC replacement will be around $. The cost to meet the tax credit guidelines would be around $(requiring a new furnace that I don’t need), leaving a $difference. That doesn't even come close. HVAC dealers are going to have to explain this over and over to frustrated customers.

The credit was written by non-technical folks and I doubt that they fully understood what it takes to achieve the SEER levels specified. If one wanted to take the chance and submit a certificate for a single unit, I'll bet that would pass by an IRS audit - no problem. I seriously doubt if an IRS agent is going to evaluate the actual SEER rating of combined equipment. Heck, I'm an engineer, have written software for HVAC controls and I still don't understand it. Imagine a congressman grappling with this.
Thanks for feedback. I’m going to put in a 13 SEER AC unit and call it good. It’s just not worth the headache.

You're in the same boat I'm in. I don't want to replace my gas furnace which still has some life in it, but still want to upgrade the efficiency of my old, leaking A/C unit to a higher efficiency H/P. Apparently there is no way legally to take advantage of the tax credit without spending more money needlessly on a new furnace. I'll probably end up getting s cheap less efficient HP. The tax credit rules are not doing what they are meant to do in our case.

[mrs reb77]

I really wish people would stop referring to these credits as rebates.

If only they WERE rebates we'd all be better off...but they're not.

This whole HVAC tax credit is turning into a three ring circus...:(

[gary_g]

This whole HVAC tax credit is turning into a three ring circus...:(

Confusion is a good excuse to give to the IRS if the credit is taken but not allowable.

[jerryd_2008]

After examining the posts here, talking to the IRS, speaking to the manufactures, and scouring the internet, I have come to the conclusion that the rebates will technically only apply to high-end systems with the latest equipment. If you have a system more than a few years old without variable speed, you are out of luck. ... (requiring a new furnace that I don’t need)...

You should read the IRS Notice 2009-53 quotes I just posted. There is no requirement for an AHRI certification that requires AC/coil/air handler combinations. All you need to do is get your manufacturer to state that the AC (and probably coil) meets the following:

Split Systems:
EER >=13
SEER >= 16

And even the manufacturer's certification is optional. But that may be wishful thinking. However, you better feel lucky or very convincing if or when you get to discuss it with an IRS auditor.

[liveirisjul]

The IRS rules say that an AC unit can be installed by itself as long as it qualifies on its own....


________________
Irs problems (www.taxmatterssolutions.com)

[spudman9]

Yesterday I authorized my contractor to replace my 10 yr old Lennox Elite condensor which was leakign and had a fried compressor. We looked at all sorts of combinations to take advantage of the Credit, however thanks to our *helpful* government, none work.

My 10Yr furnace works fine. I suggested that if I can get a full credit, why not change out both units. I have a 4 ton heat pump with propane back up.

We selected a Trane 15.6 SEER unit with the new R410a (I'm not familiar with all the technical part numbers).

Turns out that nearly all 3 ton high efficiency units qualify. Only some 3.5 ton units do. Virtually no 4 ton and higher units are on the IRS list or in the energy star tables (so I am told by my service company).

So I'm led to believe that the Credit is tailored to 3 ton and lower units. If true that is a real government ripoff. I certainly am not wealthy and live in a 3,000sf house. I guess the gov't (and I am leaving names out) thinks if you can afford a bigger house you don't need the Credit?

[jerryd_2008]

...
Turns out that nearly all 3 ton high efficiency units qualify. Only some 3.5 ton units do. Virtually no 4 ton and higher units are on the IRS list or in the energy star tables (so I am told by my service company).

... I guess the gov't (and I am leaving names out) thinks if you can afford a bigger house you don't need the Credit?

You look at 3rd party coils? I required a 4-ton unit and the manufacturer's coils didn't pass the tax credit test. Went with a 3rd party coil and manufacturer HP and furnace. IMHO many manufacturers were caught flat-footed and didn't have equipment certified or minor changes ready to go. Believe that several are coming up fast. Even in the couple months I have been looking, some brands that didn't have a prayer are getting there.

Just think that it is harder and harder for big units to pass. You consider multiple smaller units (you have to have a well designed duct system though)?

[M&B]

Does anyone think that I will have to subtract my manufactors rebate from the cost of my unit for the tax credit.

.Thanks

[jerryd_2008]

Does anyone think that I will have to subtract my manufactors rebate from the cost of my unit for the tax credit.

.Thanks

Not an expert on that but I suppose it's what the invoice says. Believe that rebate isn't the contractor's problem. You have to deal with the manufacturer on that, but first you pay the total bill to the contractor. No?