Believe it or not, the era of conventional water heaters is slowly ending.
Thanks to technology and innovative thinking, we now have tankless water heaters that are more efficient than ever before. In addition, applying for tax credits and rebates can offset the cost of installing a tankless water heater.
This article will provide information on how to save money with tax credits and rebates by using renewable energy to power your tank and explain the different types of appliances that qualify.
What Tax Incentives Are There For Tankless Water Heaters?
You can get a residential energy property credit of $300 if your tankless water heater uses a renewable energy source. Residential energy efficiency credits are no longer in effect as of December 31, 2021, but residential renewable energy products still qualify for tax credits until December 31, 2023.
There Are New Rules About Who Can Claim Tax Credits
Before getting into tankless water heater tax credits, we should discuss the available rebates and why. US citizens are encouraged to make their homes more energy-efficient by incentives such as credits and rebates for installing alternative energy equipment.
The residential energy-efficient property rebate, last updated by the IRS on April 27, 2021, offers a credit that is subtracted from the overall cost of a tankless water heater.
Qualifying tankless water heaters are those powered by solar power, geothermal heat pumps, small wind turbines, and fuel cells.
The applicable terms of tax credits for tankless water heaters are as follows:
- Tax credits for residential energy efficiency are no longer in effect as of December 31, 2021.
- The non-business energy property tax credits expired on December 31, 2021.
- Residential renewable energy products are still eligible for tax credits until December 31, 2023.
- Tax credits for energy-efficient commercial buildings were made permanent in 2021.
Renewable Energy Property Credits
Since tankless water heaters operate more efficiently than conventional water heaters, they qualify for property credits.
However, not everyone who owns one is eligible for a tax credit or rebate because, according to the IRS, the appliance has to have been installed before a particular time:
- 30% rebate if installed after December 31, 2016, and before January 1, 2020.
- 26% rebate if installed after December 31, 2019, and before January 1, 2023.
- 22% rebate if installed after December 31, 2022, and before January 1, 2024.
The rebate does not apply to rentals, but current, second homes, and new constructions qualify.
Benefits of Tankless Water Heaters
Now that we have discussed the challenges you may face when applying for a tax credit or rebate, let’s talk about the benefits. For starters, if you have a tankless water heater, you can save money now and in the future.
If you own a home, you’re probably aware that it costs money to maintain it and keep it in good working order. A home water heater might be the answer if you want to offset some expenses. Installing a tankless water heater effectively reduces your annual bills by as much as $100.
Tankless water heaters provide a convenient alternative to traditional water heaters. These units are highly efficient and use less energy than an old-fashioned storage tank model. They are also an excellent investment for future home maintenance costs.
Lower Energy Bills
Heating water to an appropriate temperature takes a lot of energy with traditional heaters. Tankless heaters can help you significantly reduce your monthly energy bills as they are much more efficient in their energy usage.
No More Freezing Pipes!
In the winter, condensation can build up in your pipes and freeze, forming ice that can disrupt your water flow and cause water lines to burst. Not only will you have to deal with a burst pipe, but you’ll also have to pay for a plumber to thaw it out. With a tankless unit, there’s no risk of pipes freezing.
Environmental Impact
As you know by now, there are several ways you can go about installing a tankless water heater. One of the lesser-known benefits is installing a tankless water heater helps reduce global warming. By using less energy, your environmental impact will be much lower.
Easy Maintenance
There are no moving parts in a tankless unit, meaning you won’t experience any maintenance issues and rarely have to call a plumber. Low risk of leaks: Since there are no moving parts, there is no risk of a tankless unit leaking.
Final Thoughts
Is the initial cost for a new tankless water heater and the subsequent energy-efficient generator worth considering? If you want to qualify for tax credits and rebates, it’s worth it. Considering the benefits of having one and the long-term savings from an investment like this is a good idea.
If a tankless unit is the best option, you’ll significantly reduce your energy bills. You’ll also enjoy the benefits of a tankless unit without worrying about the risks of a natural disaster.
Sources
- The New York Times: Consumers will benefit from lower utility bills and cheaper home upgrades, energy experts say
- IRS: Energy Incentives for Individuals: Residential Property Updated Questions and Answers
- Energy Star: Renewable Energy Tax Credits
- SolarReviews: Solar panel efficiency: how much it matters, top brands & more
- IRS: Telephone and Local Assistance
- Abacus Plumbing, Air Conditioning & Electrical: Are Tankless Water Heaters Worth The Investment?
