How to Receive a Tax Credit for a Propane Hot Water Boiler
Use government funds to replace your propane-fueled hot water boiler with a new one. If you purchase a government-approved, energy-efficient model, you'll be eligible for a substantial tax credit. The federal government offers funds for this tax credit program to encourage homeowners to use energy-saving "green" products.
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Instructions
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Weigh the pros and cons of purchasing an energy-efficient propane water heater. Buying a qualifying model will save you a tidy sum of money. The American Recovery and Reinvestment Act of 2009 provides a tax credit of 30 percent of the cost of your new energy-efficient product. This does not include the savings you'll achieve in home energy costs by operating these models. The tax credit is capped at $1,500 per year. For example, a product that costs $1,200 will be eligible for a $360 tax credit (30 percent of $1,200). A unit exceeding $5,000 will receive the maximum eligible tax credit of $1,500.
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Research the energy-efficient propane water heaters that meet the criteria for a federal tax credit before you purchase. Not all Energy Star products will qualify for this tax credit. To be eligible, the propane water heater must have an annual fuel utilization efficiency of at least 85 percent.
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Pay for your new energy-efficient water boiler and install the appliance as directed. Remember to keep all receipts for tax purposes.
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Locate the "Manufacturer's Certification" statement -- it should be included with the product packaging or in the owner's manual. The IRS recommends that you keep this document with your purchase records.
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Mail the required forms to receive your tax credit. Use IRS Tax Form 5695. This form was made available at the end of the 2009 tax year. Claim the energy-efficient tax credit for your propane water heater when you file your income tax return.
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Tips & Warnings
This energy tax credit replaces previous tax credits offered under the Energy Policy Act of 2005. The previous legislation limited the energy-efficient tax credit to a maximum of $500. The new tax credit limit has been increased to $1,500.
Always consult with a tax professional to receive the most up-to-date tax information.
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