Need an interpretation of a tax credit-any accountants/tax gurus here?
 

So, the government is offering tax incentives to get us to convert to more efficient HVAC equipment. For qualifying systems, this amounts up to a 30% credit (up to $1500 cap) on equipment/installation. For a geothermal system, they offer 30% with no cap. http://www.energy.gov/taxbreaks.htm

Are these assumptions correct?

1) Assume a $16k non-geothermal system, I'm capped at $1500, for a net cost of $14,500.

2) Assume a $26k geothermal system, I get a $7,800 credit, for a net cost of $18,200.

One salesman on Friday told me it's really only a deduction, so my net benefit is only my tax rate on the $1500 or $7800 above, but I don't think that's the case. What say you?

Re: Need an interpretation of a tax credit-any accountants/tax gurus h
 

No expert but it says "credit."

Re: Need an interpretation of a tax credit-any accountants/tax gurus h
 

http://www.energystar.gov/index.cfm?...edits.tx_index

That should about everything you are looking for. They are both credits so they are dollar for dollar. I love Holiday Inn Express;)

Re: Need an interpretation of a tax credit-any accountants/tax gurus h
 

Here's a little twist though-assume you've paid no income tax because you're income is that low. You're not going to get anything back if your net tax paid is still zero, right?

Re: Need an interpretation of a tax credit-any accountants/tax gurus h
 

That's a big yes, but an accountant should be able to tell you if you can push the credit/tax benefit forward.

Re: Need an interpretation of a tax credit-any accountants/tax gurus h
 

I think I can, but the only real "problem" is that with no "real" income to speak of with 3 dependents, I'll have virtually nothing to pay next year as well.

Guess this means I can "afford" to take some capital gains with no tax to be paid on them as I can offset them with the $6500 home buyer credit that I won't see a dime of otherwise I reckon.