Question

I have a question about claiming residential energy credit. Can I claim my new air conditioning / heating unit for a nonbusiness energy property credit?

Answer

The nonbusiness energy property credit cannot be claimed on a 2018 return because the credit expired in 2017. At this time, it has not been renewed by Congress. If the law is extended in the future, we will communicate this extension.

In prior tax years, the nonbusiness energy tax was available for energy efficient home improvements that fell into two categories: 1) building envelope components and 2) energy properties. The nonbusiness energy credit allowed you to make energy efficient home improvements that increased the heating and cooling efficiency of your main home and then provided a tax credit on your income tax return.

Building envelope

Eligible items considered part of the building envelope were:

  • Insulation material or systems
  • Exterior windows, skylights, or doors
  • Storm windows and storm doors installed over certain types of windows and doors
  • Certain metal roofs
  • Certain asphalt roofs

Energy Properties

These are home appliances that improve the home’s heating and cooling efficiency.

These improvements included:

  • Electric heat pump water heaters
  • Electric heat pumps
  • Natural gas, propane, or oil water heaters
  • Central air conditioners
  • Natural gas, propane, or oil water boilers
  • Natural gas, propane, or oil furnaces
  • Advanced main air-circulating fan used in a natural gas, propane, or oil furnace
  • Biomass fuel stoves

In claiming the credit, you were allowed to rely on the Manufacturer’s certification statements as to whether the purchase qualified as a nonbusiness energy credit. To learn more about the nonbusiness energy credit, visit www.energystar.gov.

Maximum Lifetime Credit Limit

The maximum lifetime credit for all types of property combined is $500. Of this total, not more than $200 can be for exterior windows. The property must be original use property installed in the taxpayer’s main home in the United States. For this purpose, “lifetime” means the total credit for 2006 and 2007 and/or 2009-2017.

The credit was previously claimed on Form 5695.

Note: The Nonbusiness energy credit should not be confused with the Residential Energy Efficient Property (REEP) Credit which is still allowed for solar, wind and geothermal energy properties added to your main home.

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