FaucetDirect.com and its Network of Stores pride themselves in providing the very best in ENERGY STAR-rated and other energy-efficient products. Among the hundreds of eco-friendly products we offer, few have the potential to be used as often and as reliably as tankless water heaters.
Recently signed legislation offers tax incentives to consumers (as well as businesses, utilities, and governments) who purchase, install, and utilize energy-saving products like skylights, hybrid and electric automobiles, and water heating equipment. Included in the water heating category are tankless water heaters, which are eligible for energy tax credits.
What is a tankless water heater?
Heating water is something we all do many times a day, whether it’s for cooking, laundry, washing dishes, or showering. Tankless water heaters use a heat exchange coil to heat water as it flows through the unit. The water heater doesn’t retain any water initially, except for what’s in the heat exchange coil. These water heaters are fueled by electricity, propane, or natural gas, are installed at point of use, and provide hot water instantaneously. For an in-depth explanation of how tankless water heaters work, click here, and for information on how to choose one, click here.
The main advantages of this product are obvious: you get instant hot water, and you save on water and heating costs. Not surprisingly, tankless water heaters are gaining in popularity. Both FaucetDirect.com and ImprovementDirect.com carry tankless water heaters from top brands like Bosch, Rheem, Stiebel Eltron, and Takagi, as well as American Heat and InSinkErator.
The story behind the energy tax credits
On Oct. 3, 2008, President George W. Bush signed into law the “Emergency Economic Stabilization Act of 2008.” As part of this piece of legislation, the United States government is offering tax incentives for consumers and businesses which purchase and install certain energy-efficient home improvement products—like a tankless water heater.
Back To TopHow do I know if I qualify?
Energy tax credits of $300 are available for home improvements “placed in service” from Jan. 1, 2009 through Dec. 21, 2009. If you use more than one tankless water heater in your home, you’re subject to a maximum of $500 per homeowner for all improvements combined. According to ENERGY STAR, the IRS defines “placed in service” as when the property is ready and available for use. All ENERGY STAR-qualified whole-home gas tankless and gas condensing models with an energy factor of 0.80 or greater WILL qualify (click here to read the U.S. Department of Energy’s explanation of energy factor).
As the qualifier is based on the date the unit is "Placed in Service", units purchased prior to January 1, 2009 but not yet installed may qualify if installed between Jan. 1, 2009 and Dec. 21, 2009
Qualifying tankless water heaters available on FaucetDirect.com include all models from Rheem and Takagi.
Now, the bad news. Any qualified home improvements made in 2008 ARE NOT eligible for the energy tax credit. And ENERGY STAR-qualified, high-efficiency gas storage water heaters (those that store water in a large tank) WILL NOT qualify for the energy tax credit.
Be sure to save your receipt and the manufacturer’s certification statement for tax purposes. For complete information on products covered by the energy tax credit, click here.
Back To TopWhat’s the difference between a tax credit and a tax break?
good question that’s easily answered.
A tax credit is usually more valuable than an equivalent tax deduction. A tax credit directly reduces the taxable amount due dollar-for-dollar. For example, if you receive a $500 tax credit, $500 is subtracted from your overall tax owed, and if you qualify for a refund, your refund will reflect this credit.
On the other hand, a tax break only removes a percentage of the tax you owe by reducing your overall taxable income. So the actual value of the tax break could vary from household to household, depending on actual taxable income.
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