How To Get A Water Heater Tax Credit?

Are you contemplating a new hot water heater purchase? If you are, there is an added benefit you might want to check into. Tax credits are often given for energy efficient appliances; hot water heaters are no different. Getting the tax credit for a hot water heater requires that you buy one that has been approved for the credit. You can find out which hot water heaters are eligible by looking for the energy star symbol on the tag of the hot water heating unit or on the enclosing box. Only certain types and models are eligible for this credit. Get the proper system and file on it correctly and you’ll be on your way to receiving your tax credit for buying something you already needed! Another great point is that the choices that you have in eligible hot water heaters are going to save you money in the long run too; they don’t get that rating for nothing. Therefore, when you go to find your new hot water heater, look for the ones that can save you both ways.

There are some types of hot water heaters that are not eligible for the tax credit no matter the model. These are electric storage tank and the electric tankless versions. They are not made to be energy efficient and cannot save a measurable amount of energy or money because of their make-up. The only electric version that is eligible is the heat pump type of hot water heater. These must have an energy factor of 2.0 or greater to qualify. All of the heat pump hot water heaters that qualify for the energy star are eligible for this tax credit.

There are many hot water heaters that do qualify though. Some of these are solar hot water heaters, natural gas, oil, and propane including the tankless versions. There are, of course restrictions on the eligibility of each type, but generally many of these will qualify.

In buying a solar powered hot water heater, look to make sure that the system is certified through the Solar Rating and Certification Corporation. All energy star solar water heating systems qualify and will earn you this credit. There are other exceptions such as that it must be on a home that you own, you cannot claim it on a solar water heating system for a home that you rent and similar.

For all other types mentioned above, there must be an energy factor of at least .82 or a thermal efficiency of ninety percent or greater. There are other restrictions such as must be installed in primary residence and other factors. As for the storage tank models, only commercial models qualify. Residential models do not qualify because their energy factor is not great enough. Many of the tankless models are eligible. The gas condensing varieties are also available in eligible models. It is important to look at the energy factor to make the determination of which model is going to get the tax credit for you.

You will need to have a manufacturer’s certification statement which says that the appliance qualifies for the tax credit. You can obtain this by calling the manufacturer or by looking at the website to find the information. Also you will have to file a form 5695 with your tax return. Look at the dates on the eligibility requirements to find out the applicable time period for purchase and installation. The placed in service date of your water heating system is the date that will determine which year you may file for. Take care to keep any and all receipts related to your hot water heater. This includes the installation fees as well as the purchase price. You can claim thirty percent of the costs, depending on the type only up to fifteen hundred dollars, for your filing. These costs include labor and installation. Keep all records and don’t throw away any receipt you even remotely think relevant! These receipts and the manufacturer’s certification statement will need to be turned in to the IRS for verifying the tax credit information. It is important to keep these on record for at least a five year period in the event of an audit.

Going for the type of hot water heater that will get you a tax credit is sometimes a complicated process with choosing the right model and filing extra paperwork. In any case, you must not let that stop you from getting all of the credit you are able to claim. You were a responsible consumer; now enjoy one of the many benefits from a wise decision. Only be certain to abide by all rules of eligibility and meet all the requirements called for by the IRS and you will have no trouble claiming the tax credit for purchasing an energy efficient model of hot water heater.