Residential Energy Credit

[mwpope]

I have a client that paid $450 to have insulation added to their attic that would qualify for the credit. However, the gas and electric utilities sent them rebate checks to cover the cost.

Does the taxpayer therefore not qualify for a credit since there was no net out of pocket expenses?

[BulldogTom]

That is the way I understand it. No double dipping. I am certain it works that way for the Solar, Wind and Geothermal credit.

Tom

Lodi, CA

[kcjenkins]

Yes, if he had no net cost, then he has no credit.

[mwpope]

I understand the concept of double dipping but if he reported the expense he did incur and also reported the rebate as other taxable income then there would be no double dipping and both transactions would be in theory reported correctly.

[Janitor Bob]

I understand the concept of double dipping but if he reported the expense he did incur and also reported the rebate as other taxable income then there would be no double dipping and both transactions would be in theory reported correctly.

If you did that, the full amount they received would be taxable, but they would only get a partial credit for the expense....It would be better for your client if you netted the income with the expense to arrrive at zero

[michaelmars]

anyone know off hand if the solar credit is a refundable credit? i have client that doesnt pay taxes and was wondering if the credit would be refunded to him

[mwpope]

If you did that, the full amount they received would be taxable, but they would only get a partial credit for the expense....It would be better for your client if you netted the income with the expense to arrrive at zero

In this particular case they are in the 15% tax bracket so they'll only pay $68 in income tax and will be entitled to a $135 credit. For people higher tax brackets and with state income taxes would be a wash. Thanks for everyone's input.

[kcjenkins]

Residential Solar Investment Tax Credit (IR Code §25D). The bill extends the 30% ITC for residential solar property for eight years through December 31, 2016. It also removes the cap on qualified solar electric property expenditures (currently $2,000), effective for property placed in service after December 31, 2008. The bill allows individual taxpayers to use the credit to offset AMT liability, and to carry unused credits forward to the next succeeding taxable year. The $2,000 monetary cap on solar water heating property was not lifted and remains in effect.

What property qualifies for the section 25D residential ITC?

Answer: The credit applies to "qualified solar water heating property," (defined as "property to heat water for use in a dwelling unit located in the U.S. and used as a residence by the taxpayer if at least half of the energy used by such property is derived from the sun), and to "qualified solar electric property" (defined as property which uses solar energy to generate electricity for use in a dwelling unit located in the U.S. and used as a residence by the taxpayer).

Does the elimination of the $2,000 cap on the section 25D residential credit apply to solar thermal property?

Answer: No. The elimination of the $2,000 cap applies only for qualified solar electric property expenditures.

So no, it is not refundable, but it can be carried forward if not fully used this year.

[michaelmars]

thanks - had a junior looking for 2 hours and couldn't find that answer - i to came across it just a few minites ago myself.