HVAC Replacement: A Homeowner’s Guide
Learn about the top considerations for replacing your home’s heating and cooling system, including why you may want to replace the whole system at once, the cost to replace an HVAC system, and the financial incentives that can help you upgrade to a more efficient system.
By Anne Fonda
Your central air conditioning system just went belly up. Or maybe your heat pump or your furnace is costing too much in repeated repairs. So, you need an AC replacement, or a new furnace, or a new heat pump.
Whether you’re a first-time homeowner or you’ve purchased a new HVAC system in the distant past, brush up on some of the HVAC basics you need to know before you buy.
When you get HVAC companies out to give you an estimate, at least one HVAC contractor will tell you that you need to replace your whole HVAC split system when all you think you need is air conditioner replacement or furnace replacement - but not both. What’s up with that? Are they trying to sell you stuff you don’t need?
No. They’re trying to encourage you to take a holistic approach that may save you some trouble in the future and help you get some financial benefits now and for years to come. We’ve put together this guide to help you understand split system HVAC and why replacing just one HVAC system component might not be a good short-term solution or a good decision in the long run.
In this article, you will learn about:
- When Not to Replace the Whole System
- Benefits of Replacing Your Split System All at Once
- HVAC Replacement: Key Considerations
- HVAC Replacement Cost
- HVAC Tax Credits and Rebates
- HVAC Financing
Ready? Let’s go.
When you shouldn’t replace your whole HVAC system
First, let’s talk about when you shouldn’t replace the whole system. While replacing your aging or inefficient heating and cooling system with a new matched system is a smart decision for most homeowners, it might not be for you if:
- You plan to move in less than a year or two.
- You can’t afford it right now. (Although you might be able to - more on that below.)
- The AC is brand new and you just need to replace the furnace.
“Replacing the gas furnace separately may be OK, but my recommendation is to always replace the refrigeration system at one time. That means the outdoor unit and air handler or furnace coil should always be replaced together.“
- Mark Woodruff, Senior Product Manager, Ducted Outdoor, Trane Technologies
Benefits of replacing your split system all at once
A matched system is one in which the indoor unit and outdoor unit are paired, or matched according to capacity, efficiency, HVAC brand/manufacturer, and more. There are numerous benefits to replacing your heating and cooling units at the same time with a matched system.
They include:
- Increased energy efficiency
- Enhanced performance
- Reduced carbon footprint
- Potential savings on your energy bills
- Qualified systems are eligible for federal tax incentives
- Qualified systems are eligible for rebates in some states
- Qualified systems are eligible for utility company rebates
- Increased comfort and control with smart technology
- Full warranty coverage
Think of it this way. You’ve probably had a flat tire at some point. Your mechanic likely advised you to get 4 new tires instead of replacing just one. Why? Because new tires work together more effectively, and reduce wear and tear on your car.
It’s the same thing when it comes to your HVAC system. A new unit and an older unit might not play well together. If both components of your split system (AC + furnace or heat pump + air handler) are about the same age, replacing both units now will also save you money on installation costs and unit costs.
That’s because it will be less labor intensive for an HVAC contractor to take out a whole system and replace it with a new one now than to replace one component now and another in three years. And in three years, a new central air conditioning unit or gas furnace will have gone up in price. Individual HVAC unit replacement costs will go up as well.
“My advice to anyone who may have an aging system that requires frequent repairs is to consider replacing the whole system versus just one component. Typically with an older system, the technology has become obsolete and new parts are not completely compatible with older systems.”
-Kimberly Sexton, Senior Systems Engineer, Trane Technologies
HVAC replacement: Key considerations
There are two types of considerations when it comes time for air conditioning replacement or furnace replacement - personal and system-specific.
Personal considerations
What matters to you most in a new air conditioning unit, new furnace, or heat pump? Things to consider include:
- Energy efficiency
- Total home comfort - eliminate hot and cold spots or humidity issues
- Indoor air quality (IAQ)
- Noise level in decibels
- Smart thermostat for Connected Comfort Solutions
- Warranty
- HVAC system cost
System considerations
Once you decide what is most important to you in a new HVAC system, it’s time to consider the type of system you want and system specifications. These can include, but are not limited to:
- Type of HVAC system
- Heat pump and air handler
- Heat pump and furnace in a dual-fuel system/hybrid heat system
- Air conditioner and furnace in a traditional system
- HVAC system sizing
- HVAC energy efficiency metrics
- Variable speed, two-stage, or single-stage units
- Home specifics - size, layout, construction materials, insulation, age, sun exposure
- Location/geography/climate
- If you have allergies or pets
An experienced HVAC contractor will go over all of your options with you and show you the numbers regarding potential cost savings and financial incentives with the most efficient systems.
HVAC replacement cost
Now we get down to one of the biggest considerations for a homeowner considering heat pump installation or AC system replacement - your new HVAC system cost.
How much is a new HVAC system?
The cost to replace an HVAC system will vary depending on your specific circumstances. Your AC and furnace replacement costs may vary from air handler and heat pump replacement costs, for example. You may also need new ductwork or ductwork repairs. The best way to get a more accurate figure is to get quotes from local HVAC companies.
In general, homeowners in the United States should expect to pay about $7 per square foot for a new HVAC system. But be prepared to spend more for add-ons, new ductwork, or a particularly complex installation.
Your furnace and AC replacement cost or heat pump system replacement cost will also vary based on how efficient the system is, the system size, and other factors we mentioned above.
Get quotes for HVAC replacement near you
You also need to know that you should get multiple quotes from at least 3 local HVAC companies. Their quotes may have a dramatic range from low to high. Ask why, and drill down on the numbers to make sure you’re getting the best HVAC system replacement for the best cost.
Not sure who to call? Read our blog on how to choose the best HVAC contractor for some tips. A new HVAC system is only as good as the installation.
“To gain improved efficiency, consistent performance with fewer breakdowns, and increased reliability, matched components can provide significant savings on the energy bill. I would also look at rebates, tax credits, and other financial incentives currently available when you install a new, energy-efficient HVAC system.”
-Kimberly Sexton, Senior Systems Engineer, Trane Technologies
HVAC federal tax credits and rebates can help offset the cost
You can help offset the cost of a new furnace/AC combo or new heat pump installation if you choose ENERGY STAR®-qualified units. When units meet a certain efficiency level, they may be qualified for a federal energy tax credit under the Inflation Reduction Act of 2022 (IRA).
Qualified heat pump systems may be eligible for up to $8,000 in state rebates based on your state and your income.
Qualified heat pump systems may be eligible for up to $2,000 in tax credits.
A qualified furnace and AC installation may be eligible for up to $1,200 in energy tax credits.
Qualified systems may be eligible for manufacturer’s rebates as well as rebates from your local utility company depending on your location.
Remember, replacing a single component could disqualify you from getting energy efficiency tax credits or rebates. Consult with local HVAC pros and your tax advisor for clarification.
HVAC financing makes getting a matched system easier
If you think you can’t afford furnace and AC replacement at the same time, you may not know about your HVAC financing options, Few people have the cash to pay for a new system in full. But that doesn’t have to stop you from increasing your family’s comfort and saving on your energy bills.
And, don’t forget that regular HVAC maintenance can help keep your new system running at peak performance and help protect your investment, with the majority of the maintenance left to HVAC technicians.
Anne Fonda, Content Writer
A Content Writer with Trane Technologies, Anne Fonda researches topics and writes for Trane® and associated residential HVAC brands. She works in collaboration with Trane Technologies subject matter experts, offering easy-to-understand, informative content on complex topics. Her goal is to help consumers make informed decisions on the products and services they need.
She has written for HVAC and other service provider websites for over 16 years. Before transitioning to web content writing, Anne had a 14-year stint as an award-winning journalist. She graduated cum laude from the University of Missouri-Columbia School of Journalism.
When she’s not working, Anne enjoys playing word games, reading, gardening, spending time with family, and visiting gardens and museums.
Expert review by Kimberly Sexton, Senior Systems Engineer
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