Using the clean energy tax credits

[skyking1]

The new house has extensive use of products and methods that I can apply to the 30% tax credit.
My understanding is I will have to get a certificate of occupancy in the year that I want to use the tax credit. In other words, I can't start building the house and then apply for the tax credit if the house is not finished by the end of the tax year.
Has anyone else looked into that and is that their understanding also?
It does pose some difficulties, as it is less likely that I'll be able to get it done by the end of 2023.

 

[SecondCor521]

Yes, generally for any of the energy tax credits, whatever it is that you're claiming the credit for has to be put into service in the tax year in which you claim the credits. For a new home, that almost certainly means that it is finished; it also might mean that you need to own it. See the instructions for Form 5695 at IRS.gov for details.

The Inflation Reduction Act extended the 30% tax credit through 2032. While they can always change the law, and you may have reasons to want to claim the credit in 2023, you will likely be able to claim the credit on your 2024 taxes.

 

[tulak]

Does anyone know if there are any income limits to taking the energy tax credits?

I’ve done a brief look and as far as I can tell, there are no income limits.

I’m looking to install mini-splits and possibly a tankless water heater. If I can get the credit, then it would be a good year to get this done.

 

[skyking1]

It does not provide a refund, but a credit can be carried forward to at least the next tax year.
We will see what is possible. If I don't break ground before July, it is not likely I can get occupancy with me doing most of the work.
What I can do is postpone the Geothermal heat pump purchase until early 2024, and the associated hydronic tubing for the warm floors.
I will lose the tax credit for the tubing in the slab and the ground loop tubing, unless I can bring those receipts forward into the 2024 tax year.
With me doing the bulk of the work there is no way to finesse it with a contractor carrying me on the materials, etc.
The solar panels are not a problem. I can pre-plumb that install with conduit etc and install in 2024.
The real bummer is we will have significant income in 2023 and not so much in 2024.
We could really use a 15K tax credit!

 

[SecondCor521]

Does anyone know if there are any income limits to taking the energy tax credits?

I’ve done a brief look and as far as I can tell, there are no income limits.

I’m looking to install mini-splits and possibly a tankless water heater. If I can get the credit, then it would be a good year to get this done.

There are income limits (and numerous other limits) on the EV credits.

I don't think there are income limits on the home energy stuff, but check the IRS pubs to be sure.

There are some (fairly low) dollar limits in terms of the maximum credit amount for things like heating and cooling, so don't assume the entire cost of the system will be a credit.

Also, the energy credits are non refundable, so they only reduce tax liability. They may be able to be carried forward, not sure offhand.

The EV credits are non refundable and do not carry forward AFAIK.

 

[tulak]

Yes, there are income limits for EV.

I've looked regarding energy credits and haven't found any income limits. The amounts are low, but not insignificant. For the mini-splits, it's up to 30% max $2000 and for the tankless up to 30% max $600. Both of these can be stacked, for $2600 worth of savings. Per year, you are limited to a max of a $3200 credit, so if you exceed that, it could be better stage the work over a couple of years, assuming you can get a credit beyond 2023.

There are also other local incentives that you might qualify for. For the tankless, I should qualify for an additional $150 rebate from the local utility. It's a good year to make these improvements and you get support the local economy. The harder part is finding a good contractor to do the work.

 

[skyking1]

that is a difficulty. I am DIY everything on the house that I can, and I can source all the equipment to do so.