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Building a Home

Form 5695 Residential energy Credit - do I qualify?

16 years ago

The official instructions say - "... or in the case of costs connected with the construction or reconstruction of

your home, when your original use of the constructed

or reconstructed home begins."

Yet I've seen discussion web-sites that definitively say this is for existing home improvements only, not new construction. And I've seen forums where professional tax preparers disagree.

We owned the lot and paid every step of the way from a personal construction loan, so the builder was not able to take any tax credits. So if the wording on this is an attemp to prevent both builders and owners to both take a tax credit, that doesn't apply here. But that probably doesn't matter to the IRS.

I don't want to miss a credit, but am fearful of being stung on an audit.

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Comments (4)

mightyanvil
16 years ago
The 10% consumer tax credit (max $500) for new energy efficient windows, doors, insulation, roofs, HVAC and non-solar water heaters is only available for existing homes.

However, the tax credit for photovoltaics, solar water heating, and fuel cells is available for homeowners building new homes.

There is a $2,000 tax credit for building a new energy efficient home, but it is only available to "eligible contractors"; therefore, owner/builders may not receive the builder tax credit unless employed as eligible contractors.

Here is a link that might be useful: tax credits
shawneeks
Original Author
16 years ago
The $2000 for builders is form 8908.

Form 5695 is for individual consumers, and where the text reads "... or in the case of costs connected with the construction...".

What you have told me is consistant with what I've read elsewhere, but you can probably see why both I and others have been confused. Poor choice of wording by the IRS.
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shawneeks
Original Author
16 years ago
I should actually put in the entire sentence to help the context.
"You may be able to take these credits if you made
energy saving improvements to your home located in
the United States in 2007. For credit purposes, costs
are treated as being paid when the original installation
of the item is completed, or in the case of costs
connected with the construction or reconstruction of
your home, when your original use of the constructed
or reconstructed home begins."

So, the house was 'constructed' in 2006/2007 and we started using in in 2007. How does that not fit the criteria above?
mightyanvil
16 years ago
The sentence you are quoting refers to a case that is allowed in Part II in which the credit can be claimed for property installed in a new home since the structure in Part II does not have to be your main home like it does in Part I.

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