Part of the tax extender bill passed by Congress in December 2010 made significant changes to tax incentives for federal taxpayers who install qualified energy efficient retrofits in their home, including higher efficiency heating, ventilation, and air conditioning (HVAC) equipment in their primary residences. An eligible taxpayer may claim up to $500 in tax credits, subject to caps based on the type of equipment installed.
You may now qualify for tax credits equal to 10% of the costs (up to a $300 limit) for installing a high efficiency central air conditioner, heat pump, or hot water heater. You may also qualify for tax credits equal to 10% of the costs (up to $150 limit) for installing a qualified furnace or hot water boiler. A smaller tax credit of 10% of the installed costs (up to $50 limit) is available for installing a system with an advanced main air circulating fan.
But you have to hurry because these tax credits are only available for improvements made in 2011. Not taking advantage of this incentive just leaves money on the table.