For example, if a permanent tenant made improvements without being reimbursed (but did not own the home), could the tenant claim that improvement on their taxes?
No, if you rent the home you would not be able to claim the energy improvement credit due to the home ownership requirement. Per the IRS, "due to the home ownership requirement, a taxpayer who rents the home in which such property is installed would not be entitled to the credit." For more information see the link below:
But that reads that it’s for the certain improvements and claiming the credit for exterior windows or skylights, exterior doors, and insulation materials or systems (including air sealing materials or systems) requires ownership.
In the next paragraph, for other improvements, it mentions that it must be a home in the US and OWNED OR USED by the taxpayer. A taxpayer may claim the credit for a home energy audit of a home the taxpayer rents. Due to the principal residence requirement, a taxpayer may not claim the credit for a home energy audit of the taxpayer’s second home.
Thank you for the article, just wanted to clarify the answer for others!
There are 3 different credits on form 5695.
Under section 25C, the credit for energy efficient home improvements (windows, doors, insulation, heat pump) applies to any dwelling that is owned by the taxpayer AND used as the taxpayer's principal residence (main home).
However, also under section 25C, the energy efficient property credit (efficient furnace, air conditioning, boiler, water heater) can be applied to any dwelling that the taxpayer uses as a residence. It does not have to be your main residence and you don't have to own the dwelling.
Under section 25D, residential clean energy credit (solar, geothermal, wind, fuel cell, battery), the credit can be applied to a dwelling the taxpayer uses as a residence (solar, wind, geothermal, battery) or their main residence (fuel cell). The taxpayer does not have to own the home.
It depends on the type of improvement you are doing. For energy efficient home improvements the requirement is you must own the home and use as your primary residence.
If these are the items you replace it would not qualify for the credit. The article explains that the energy efficient home improvement applies to the following:
However, as opus17 stated, there are additional credits that may be available to the renters depending on what you are improving. The Energy Efficient Property Credit applies to the following:
The Clean Energy Credit applies to the following:
If these are the items you replaced, then the requirement to claim the credit is the taxpayer must use the property as a residence. In this case, it would apply to renters.
[Edited 01/21/25|3:55pm PST]