HOME ENERGY IMPROVEMENTS

[kathy-102]

We purchased an electric heat pump in 2021 and are trying to take the improvement in T.T. However, even though "electric heat pumps" are included in the general list on the first page in the energy improvements section, there is no entry for electric heat pumps on the following pages where we are supposed to select the improvement that we made. PLEASE HELP. THANK YOU.

[DoninGA · Accepted solution]

Qualified energy property is any of the following.
• Certain electric heat pump water heaters; electric heat pumps; central air conditioners; and natural gas, propane, or oil water heaters.

Enter the cost in the box labeled Energy-Efficient Building Property.

[kathy-102]

THANKS VERY MUCH FOR YOUR QUICK AND HELPFUL RESPONSE!

[Arcisle]

I also want to install an energy-efficient water heater. Is this the same thing? I don't understand how to deduct this from my taxes. Do I have to itemize?

[DoninGA]

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@Arcisle wrote:

I also want to install an energy-efficient water heater. Is this the same thing? I don't understand how to deduct this from my taxes. Do I have to itemize?

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Answered here - https://ttlc.intuit.com/community/tax-credits-deductions/discussion/re-energy-efficient-home-improve...

[mfagerburg]

Your reply about where to enter the cost of a heat pump :
"Enter the cost in the box labeled Energy-Efficient Building Property."
But entering the cost in that box only yields a $300 credit in the tax in Turbo Tax.

However, looking at the IRS Fact Sheet 2022-40 released on December 22, 2022 says that electric heat pumps are eligible for an up to 30% Energy Efficient Home Improvement Credit as a "heat pump is in a category of energy property exempted from both the $600 per item limit and the $1,200 aggregate limit..." The example they give allows a $1,500 credit for a $5,000 heat pump.
Please explain why this is not possible in the Quicken form 5695. I think it needs updating.
Thanks in advance for any help on this!

[DMarkM1]

The new Energy Efficient Home Improvement Credit is for property placed in service on or after January 1, 2023. and before January 1, 2033.  Here is the IRS Link.

[mfagerburg]

And I answered my own question. in the PDF https://www.irs.gov/pub/taxpros/fs-2022-40.pdf; it says:
"General Overview of the Energy Efficient Home Improvement Credit Through December 31, 2022, the energy efficient home improvement credit is a $500 lifetime credit. As amended by the IRA, the energy efficient home improvement credit is increased for years after 2022, with an annual credit of generally up to $1,200."

So for all of us who installed heat pumps to replace oil furnaces in 2022, we are limited to a $300 deduction. Sigh.