I'm interested in installing a heat pump (mini-split) for our garage. Does this qualify for the 30% (max $2,000) tax credit? And if so, are there income limits?

[Opus 17]

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[Opus 17]

The code allows heat pumps, and does not seem to require that they be whole house (but it must be a heat pump and not a freon-type air conditioner).

The heat pump must "meet or exceed the highest efficiency tier (not including any advanced tier) established by the Consortium for Energy Efficiency which is in effect as of the beginning of the calendar year in which the property is placed in service."  You will have to check with the CEE or the manufacturer to see if it meets the standard.

[AmeliesUncle]

It does need to be part of your "residence".  If the garage is near or attached to your home and is used for personal purposes, it would be included as part of your residence and therefore would qualify for the credit.

However, let' say it is a detached garage and it is only used for business purposes.  I can't see how that could be considered as part of your "residence", so that would not qualify for the credit.

[Opus 17]

Right, it has to be installed in your "main home", not just any place you use as a residence, but the place you live most of the time and consider your main home.

And if this garage happens to be used for business only, you can't use this section 25C credit (but there might be an appropriate business credit, I have not looked that up).  If the garage was used 50% for business and 50% as your home garage, you could apply 50% of the cost toward the credit.

There is no upper income phase-out for the credit.  If your income is low enough–or you have other deductions and credits–so that you don't actually owe income tax, you won't get the benefit of the credit.    It can reduce your tax, but can't give you a refund if you owe no tax to start. 

[AmeliesUncle]

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@Opus 17 wrote:

Right, it has to be installed in your "main home", not just any place you use as a residence, but the place you live most of the time and consider your main home.

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It does not need to be your main home.  While the first part of the §25C credit (windows, doors, insulation, etc.) needs to be on the main home, the second part of the §25C credit (heat pumps, AC, furnace, biomass stove, boiler, electric panel, etc.) can be on any personal residence.

[PSM1]

Only specific heat pump units with qualifying energy efficiency scores get a 30% up rebate of up to $2000.

The rebate is actually received as a tax credit.  For this particular benefit, I don't think there is an income limit.

Interestingly, as of a week ago, the current Turbotax form to calculate the credit had not been updated properly.  I purchased a qualifying heat pump this past summer.

[Affordabletaxes2021]

The IRS hasn’t finalized a lot of forms yet. Once they do and the system is updated it’ll work correctly.

[Wheresmyrefund7113]

Did they ever get this straightened out?

[DoninGA]

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@Wheresmyrefund7113 wrote:

Did they ever get this straightened out?

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The Form 5695 Residential Energy Credits for tax year 2023 has not yet been finalized in TurboTax.

The Form 5695 is scheduled to be available in TurboTax on 02/07/2024 (subject to change).

Go to his TurboTax website for forms availability - https://form-status.app.intuit.com/tax-forms-availability/formsavailability?albRedirect=true&product...

[RC Fraiche]

Thanks for the info. Do you know, off-hand, if I already filled in the tax information, will it update automatically once the form has been released? 

Similarly, with the new child credit, will that automatically update if it should change?

I have not submitted it yet.

Thanks

[AbrahamT]

It should. I would suggest that you check after Febuary 7 to see that the calculations were properly accounted for.