Does heat pump (wall mount) installation for full house qualify as home improvement (similar to central air) for adjusting basis for capital gains for primary home sale?

[dxtihzspssmnejln]

Hi,

I sold my primary home in 2022. I had installed high efficiency heat pumps (Mitsubishi wall mounts) for cooling for the entire house. These heat pumps can also be used for heating. Publication 523 does not mention heat pumps in "Improvements" section:
----
Systems
Heating system 
Central air conditioning
Furnace
Duct work
Central humidifier
Central vacuum
Air/water filtration systems
Wiring
Security system
Lawn sprinkler system

Can I add this heat pump installation to the cost basis to reduce capital gains tax? Are wall mount heat pump unites equivalent to central air?

Thanks in advance for the help!

[KrisD15]

Yes, Heat Pumps are part of the Heating Ventilation Air Conditioning (HVAC) system.  

[dxtihzspssmnejln]

Thank you for the response! Just to double confirm - Can I include the installation cost for heat pump in "Permanent Improvements" while using turbo tax to compute capital gains. The reason I asked again is that p523 does not say explicitly use the term HVAC.  It is using "Heating Systems" and "Central Air".

In other words, can I include that amount in 4.d in the the worksheet at  https://www.irs.gov/publications/p523#en_US_2022_publink100010755?

d. "Any amounts you spent on construction or other improvements that are still part of your home at the time of sale (not including costs of maintenance and repairs). See Basis Adjustments—Details and Exceptions"

Thanks again!

[PattiF]

The IRS defines an electric heat pump as energy-efficient building property when defining what qualifies for an energy credit for a personal home. The heat pump can be added to the cost basis of the house. The installation of the heat pump may also be eligible for an energy credit that would reduce any tax liability on your 2022 tax return. If you do take the credit, you would deduct the amount of the credit from the total cost before adding it to the cost basis of your house.

Please see this TurboTax Tips about energy credits and energy savings.

@dxtihzspssmnejln 

[dxtihzspssmnejln]

@PattiF , @KrisD15 . Thanks a lot for the help!