Energy -Efficient Building Property Heat Pump

[SharpTJ]

The only place to enter a new energy efficient heat pump is  under the "Energy-Efficient Building Property" line.  I paid $6,475.00 for a new heat pump, yet the software shows only a $300 deduction.  

According to IRS FAQ  here https://www.irs.gov/pub/taxpros/fs-2022-40.pdf 

"...instead of  purchasing and installing a central air conditioner at a cost of $5,000, the taxpayer purchases and installs an electric heat pump at a cost of $5,000. The heat pump meets the applicable energy efficiency and other requirements for qualifying for the Energy Efficient Home Improvement Credit. Here, 30 percent of the taxpayer’s costs for the heat pump is $1,500, and since the heat pump is in a category of energy property exempted from both the $600 per item limit and the $1,200 aggregate limit, the taxpayer can claim an Energy Efficient Home Improvement Credit of $1,500 for the costs of the heat pump
alone."

[Opus 17 · Accepted solution]

Sorry, the 30% credit is only effective for heat pumps placed in service after 1/1/23. That credit is 30% of the cost plus installation up to $2000.

For property installed in 2022, you have to use the rules in place for 2022.  That's a 10% credit with a cap of $300 and a lifetime cap of $500, so if you claimed the same credit in the past for other energy saving improvements, your credit now might be further reduced. 

[Jimi1970]

The IRS article you quote discusses the changes to the energy efficient property credit effective January 1, 2023. Installations made during 2022 fall under the old rules.

[emohamed]

Where can I navigate on Turbotax 2022 home and business so that I can enter the cost for the heat pumps I installed after Jan 2023?

[KrisD15]

You will claim that NEXT year on your 2023 tax year return. 

According to the IRS:

"Taxpayers typically claim expenses for the credit in the year in which they install the property in their

homes."

LINK

"Q1. May a taxpayer claim the credits in the year of purchase if installation of the qualifying property occurs in a later year? (added December 22, 2022)

A1. No. A taxpayer may not claim the credits until the year the property is installed."

LINK

[Opus 17]

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@emohamed wrote:

Where can I navigate on Turbotax 2022 home and business so that I can enter the cost for the heat pumps I installed after Jan 2023?

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Any tax credits are claimed as of the date the property is placed in service (installed, inspected and turned on), regardless of when the contract was signed or when you actually paid for the property.