Deductions & credits

Yes, you can do both.  But, the value of the improvement to your home office will be based on the net price of the improvement (the hot water heater) after subtracting the energy efficiency credit (which is 26% of the cost if it is a solar water heater, and 10% of the cost up to $300 for a gas or electric heat pump water heater as long as it meets certain minimum efficiency standards.)

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