Replace Your Furnace, Save $500

Tax credits for installing energy efficient furnaces expire at the end of the year.

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Energy Star certified furnace from Trane.

Photo: Trane

By Dan Shapley

Generally summer is the best time to think about maintaining or replacing an old furnace. The last thing you want to do is wait for a breakdown in the winter, when you're relying on its heat!

Upgrading an old inefficient furnace to an Energy Star model can result in dramatic savings. According to the Department of Energy, many homeowners could come close to cutting their fuel bills in half. Because heating a home can account for as much half of a home's total energy bill — nearly $1,000 a year — efficiency could be worth close to $500 a year.

If you buy an Energy Star furnace in 2011, you can get a $150 tax credit if you purchase an oil, natural gas or propane furnace that is at least 95% efficient. The tax credit expires at the end of 2011. Also check for local incentives from your state, city or utility, which may further reduce the cost.

The federal tax credit expires just before new Energy Star furnace standards go into effect. As of Feb. 1, 2012, Energy Star furnaces will be about 5% more efficient than those that hold the sticker today. Further, for the first time, furnaces for sale in the warmer climate of the South will be held to different standards than the cold climate of the North, where the new Energy Star furnaces will be 16% more efficient than typical models for sale.

If this isn't the year for a replacement, remember to maintain your furnace so it runs safely and at its optimum efficiency.

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