Can I deduct a new HVAC furnace/airconditioning system, replacing all my ductwork and adding 10 inches of blown in insulation in my attic?

[geraldlauersdorf]

Does replacing all my  duct work qualify as a energy savings deduction?

[KarenJ · Accepted solution]

Unfortunately, the Nonbusiness Energy Property Credit expired after tax year 2017.  This credit was for certain high-efficiency heating and air conditioning systems, water heaters and stoves that burn biomass, energy-efficient windows and skylights, energy-efficient doors, qualifying insulation and certain roofs.

The Residential Energy Efficient Property Credit is in effect for 2018 to the end of 2021.  It includes Qualified solar electric property, Qualified solar water heating property, Qualified small wind energy property,  Qualified geothermal heat pump property and Qualified fuel cell property costs.

[Edited 03.25.20 | 10:55 am]

[MichiganTax1]

The answer is confusing. I read this.. but having trouble finding what qualifies.

"The residential energy property credit, which expired at the end of December 2014, was extended for two years through December 2016 by the Protecting Americans from Tax Hikes Act of 2015. The Consolidated Appropriations Act, 2018 extended the credit through December 2017. The nonbusiness energy property credit expired on December 31, 2017 but was retroactively extended for tax years 2018, 2019 and 2020 on December 20, 2019 as part of the Further Consolidated Appropriations Act.  On December 27, 2020, the credit was again extended through December 31, 2021, by the Consolidated Appropriations Act, 2021.  The credit had previously been extended by legislation several times. See Notice 2013-70 for more information on this credit as well as the credit for alternative energy equipment. "

"Q. Who qualifies to claim a residential energy property credit? Are there limitations? (updated April 27, 2021)

A. You may be able to take these credits if you made energy saving improvements to your principal residence during the taxable year. In 2018, 2019 2020, and 2021 the residential energy property credit is limited to an overall lifetime credit limit of $500 ($200 lifetime limit for windows). There are also other individual credit limitations:

• $50 for any advanced main air circulating fan
• $150 for any qualified natural gas, propane, or oil furnace or hot water boiler
• $300 for any item of energy-efficient building property

The residential energy property credit is nonrefundable. A nonrefundable tax credit allows taxpayers to lower their tax liability to zero, but not below zero."

[ZoltanB45]

 You highlighted the $150 but you may qualify for the $300 credit if the AC unit was energy efficient. You will need to find out if the unit purchased saved energy. If it was labeled as  'ENERGY STAR MOST EFFICIENT," it qualifies.  Look up the item and see if it has that tag.

[psullivan12]

I replaced both the furnace and air-conditioning system with energy star efficient ones in 2021. However, my Turbo Tax Delux only lists the furnace option and just gives me the $150 credit.  How can I list the air-conditioning system to get the full $300 credit?

[MayaD]

Enter the amount you paid for next to energy-efficient building property. Examples include: electric heat pump water heater, central air conditioner, natural gas, propane, or oil water heater.

These items must meet specific energy efficiency guidelines. 

• Select Federal Taxes
• Click on Deductions and Credit
• Click on I'll choose what I work on (if shown)
• Under Your Home
• On Home Energy Credits, click the start or update button
• Continue until you get to the screen Tell Us How Much You Paid for Energy-Saving Improvements -
• Enter your cost Enter the cost in the box labeled Energy-Efficient Building Property.