The American Recovery and Reinvestment Act of 2009 signed on February 17, 2009, by President Obama has made significant changes to homeowner tax credits for qualifying energy-efficient, residential tankless water heaters placed in service between the years of January 1, 2009 to December 31, 2010.
Federal Tax Credit
Tankless water heaters need to have an energy factor of 0.82 or greater to meet the required standard of “Qualified Energy Property” under the American Recovery and Reinvestment Act of 2009 and are therefore deemed eligible for the tax credit under section 25C of the Federal Internal Revenue Code for the tax years of 2009 and 2010.
Homeowners who purchase and install a qualifying tankless water heater will now be eligible for tax credit equal to 30% of the full purchase and installation cost up to a maximum of $1,500.
State Tax Credit
You can also get a tax credit of $340 on your Oregon income taxes for qualifying tankless water heaters. The Oregon Department of Energy has a list of eligible models and qualifying systems. The tax credit is the amount noted on the list of qualifying equipment or 25% of the net purchase price of the equipment (not including labor), or whichever is less. The state of Oregon has the highest incentives for energy efficient water heaters.
To qualify for a state tax credit, you must have an Oregon income tax liability. If you do not have an Oregon income tax liability, you may choose to transfer your tax credit to an individual who does. Checking the Pass-Through Option section on the application form does this. More information on this subject is available on the form. The equipment must be located in an Oregon dwelling that is your primary or secondary residence to qualify for this tax credit.
Applications for tax credits must be received by the Oregon Department of Energy no later than April 1 of the year following the purchase, even if the tax credit is carried forward.
Qualifying tankless water heaters must have a minimum energy-efficiency rating of 80%. In comparison, a tank gas water heater in the typical home is only 55% energy-efficient.
Energy Trust of Oregon
To get cash back for your energy-saving water heater you must be an Oregon residential customer who heats your water through Portland General Electric, Pacific Power, NW Natural, or Cascade Natural Gas to be eligible to participate in the program.
To receive an Energy Trust cash incentive of $200, contact an Energy Trust trade ally contractor, or any other licensed contractor with a current Construction Contractors Board (CCB) license. If you are seeking to apply for any bonus package incentives, you must use a trade ally contractor to install your measures. Visit www.energytrust.org for more information. You must mail or fax your contractor’s invoice to the Energy Trust with your signed and completed Energy Trust application (Energy Trust Form 300A) within 120 days of installation.
Do a Cost Analysis First
When doing a cost analysis for an investment into a tankless water heater always factor in what remaining value is left on your existing storage tank water heater. The average life expectancy of a tanked gas water heater is 13 years and 15 years for an electric type, with replacement cost of $550 to $750 depending on type and capacity.
Joe Brewer is the owner of Columbia Contracting Inc. Water Heater Service, Portland, OR. To contact Brewer call 505-225-0774.
