Yes, there are several federal, provincial, and municipal credits, rebates, and interest-free loan programs available for purchasing and installing a new, high-efficiency furnace or heat pump. Because you are located in Montreal, QC, several localized programs apply directly to you.
How Do I Claim a New Furnace on My Taxes? As a homeowner, you can claim a credit on your energy-efficient furnace by filling out Form 1040 (or 1040NR for non-resident aliens). To determine your credit amount, complete the Residential Energy Credits Form 5695.
Heating and Cooling Rebates for Canadians
You can receive up to $650 when you participate in this incentive alone. Other incentives include: $250 when you replace your old furnace with a new high-efficiency model. Your new central heating system must have an Electronically Commutated Motor (ECM).
High-efficiency furnaces (90-99% AFUE) are generally worth it if you live in a cold climate, plan to stay in your home for over 5–10 years, or qualify for rebates. They offer 15–20% energy savings, quieter operation, and better temperature consistency, but cost $$1,500–$2,500 more upfront and require specialized maintenance.
Ontario homeowners can access rebates for heating upgrades through the Home Renovation Savings Program. Instead of traditional gas furnaces, modern incentives heavily prioritize energy efficiency by offering up to $7,500 for cold-climate air-source heat pumps and up to $12,000 for ground-source heat pumps.
In 2026, Ontario homeowners can access HVAC rebates of up to $25,000 depending on their current heating source. The most substantial incentives target heat pump upgrades to replace fossil fuels, with separate, tiered programs available for natural gas, electric, and oil-heated homes.
To qualify for appliance rebates, you must: Be a residential customer connected to the Ontario electricity grid. Have an existing electric appliance in need of replacing. Purchase a new, eligible appliance.
For a typical 2,000 sq. ft. home, furnace costs (equipment + installation) usually range from $4,000–$8,000 depending on fuel type, efficiency, system size, and features. High-efficiency or advanced models can cost more upfront but save on energy bills over time.
The best time to purchase a furnace is during the spring, summer or early fall, between peak winter and summer seasons. This is when HVAC supply is highest and demand is lower, leading to more furnace availability, promotions, and discounted pricing.
Yes HVAC prices have steadily increased over the past few years, and 2026 is no exception. These increases are affecting everything from entry-level systems to high-efficiency units, making it more expensive than ever to install or replace HVAC systems.
You may be eligible for the Empower program. A program offering FREE energy efficiency upgrades including insulation, energy-efficient appliance upgrades, energy-efficient lighting, HVAC upgrades, and more. Each of these upgrades are completely free.
Qualified improvement property (QIP), like tenant buildouts and interior upgrades, remains bonus-eligible. For example, a commercial landlord renovating office suites with new lighting, flooring, and HVAC systems may be able to fully deduct those improvements in the first year.
If your tank temperature is set higher than necessary, your heat pump has to work harder to maintain it. The higher the target temperature, the more electricity it uses. Frequent “boost” cycles can also increase your bill.
The 10 Most Overlooked Tax Deductions
Furnaces
If it's a like for like replacement, ie similar features and/or level of equipment you can expense it. If it's an upgrade, like a higher end model, etc, then it will be considered as a betterment which will need to be capitalized.
You should probably Replace if: [ ] The repair costs more than 50% of a new unit. [ ] The furnace is over 15 years old. [ ] You have had to repair it more than once in the last 2 years.
The Average Furnace Lifespan
A well-maintained furnace can last at least 15 to 20 years, but completing annual maintenance and being diligent with furnace repairs can extend its life even longer.
A good rule of thumb for energy-saving heating temperature is to set your thermostat at 68 degrees Fahrenheit. For more comfort, try increasing the temperature by 1 or 2 degrees at a time. For energy savings, turn the temperature down 1 or 2 degrees at a time.
You may be able to improve efficiency by replacing a part, but if your furnace is 15+ years old, a new furnace will be more efficient and more cost-effective. You'll save money on repair bills and future energy bills.
The heat exchanger is often considered the most costly part of a furnace to repair or replace. It is a critical component that transfers heat from the combustion process to the air that circulates throughout your home. Over time, heat exchangers can crack due to the constant heating and cooling cycles they undergo.
Below are some of the best furnace brands for different homeowner priorities:
Ontario energy rebates in 2026 consist of three main categories: automatic on-bill rate relief, renovation programs for efficiency upgrades, and income-based assistance.
- For a 1 person household, the household income is $38,000 or less. - For a 2 person household, the household income is $54,000 or less. - For a 3 - 4 person household, the household income is $65,000 or less. - For a household of 5 or more people, the household income is $71,000 or less.
Ontario offers several major rebate and incentive programs, primarily focused on home energy efficiency, bill reductions, and income-based support.