Two Oregon programs that provide tax credits to residential property owners who update their heating systems will expire next year.
Under the Residential Energy Tax Credit program, homeowners may receive from $300 to $6,000 credit on state taxes for upgrading less efficient electrical heating systems to more efficient tankless gas water heaters, gas furnaces and ductless heat pumps, among other improvements. The 40-year-old program, which also includes installation of solar electric, water and heating systems, expires in December 2017.
“We’ve done more than 570,000 residential tax credits over the duration of the program,” wrote Rachel Wray, Oregon Department of Energy spokeswoman, in an email Tuesday. “For the past two calendar years, 2014 and 2015, we’ve issued around 15,300 residential tax credits each year.”
Many property owners recoup their costs to install improved heating systems from both the tax credit and the energy savings that result, said employees of Bend heating and air-conditioning installers.
“If you’re going from wall heaters or any kind of electric-resistance heat to a ductless system, then generally, yes, you’re going to get some kind of credit,” said Gregg Geiger, sales coordinator for Central Oregon Heating & Cooling, of Bend. “It depends on the efficiency of the updated equipment and what you’re going from.”
John Baker, owner of a 12-unit rental complex at SE Tempest Drive and 15th Street, said he recently had ductless heat pumps installed for each unit. As part of the job, Bend Heating & Sheet Metal completed the paperwork required to claim the tax credit, he said.
“I was glad I didn’t have to do it,” Baker said. “They did 100 percent of it. Each unit has a seven-page form.”
Randall Marchington, estimator for Bend Heating & Sheet Metal, said the availability of these tax credits is not widely known. Some restrictions apply. For example, only sole proprietors, individuals or limited liability corporations that own homes, rental homes or commercial structures may take advantage of the tax credits, he said. The credit is applied to state income taxes, so property owners must be Oregon residents.
To qualify, the property owner must purchase the equipment before Dec. 31, 2017, have it installed by April 1, 2018, and apply for the tax credit by a date yet to be announced, said Michael Williams, energy incentives program manager for the Oregon Department of Energy.
Another program, Small Premium Projects, provides tax credits to business owners, including owners of rental properties who make improvements for energy efficiency, Marchington said. That program provides a credit of 35 percent of equipment costs up to $20,000. The program has $2 million available on a first-come, first-served basis, for applications filed by June 30, Williams said. Applications for projects greater than $20,000 are handled competitively and reward those projects that go beyond what building codes require, he said.
A residential property owner may apply for a tax credit for a project under either the Residential Energy Tax Credit or the Small Premium Projects, but not both, Williams said. Both programs are available to homeowners and landlords, for example, but the Small Premium Projects is tailored for commercial or rental properties, as long as the rentals are primary residences, he said.
“There are some overlaps in the two, but they’re not the same,” Williams said. “(Residential Energy Tax Credit) doesn’t cover the installation of weatherization, but it’s something you may do under (Small Premium Projects).”
The deadline for the Small Premium Projects varies according to a business fiscal year. Business owners may have until June 30, 2018 to complete a project for credit, but should seek further information from the Energy Department.
“It’s a pretty robust program,” Wray said of all the tax credits for improving energy efficiency.
Additionally, the Energy Trust of Oregon also provides a cash incentive of $500 to $800 per residential unit for qualified improvements. Residential property owners will realize the advantage in energy efficiency as the cost of electrical power begins to rise, as Marchington said he believes is inevitable. As much as one-third of all rental housing stock in Oregon still relies on electric baseboard or wall heating units, he said.
“I would like to see more property owners get energy smart,” he said, “while the incentives are available.”
— Reporter: 541-617-7815,