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jgordosea
jgordosea, Enrolled Agent
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Experience:  I've prepared all types of taxes since 1987.
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My house burned down December 30, 2008. I am rebuilding.

Resolved Question:

My house burned down December 30, 2008. I am rebuilding. I included several "green" items. They are, breifly:
1 Geothermal-------cost $17,000.
2 Windows/Doors (Anderson: high quality that qualify for "tax credits"???
Under normal curcumstances, my "retired" income would require me to pay about $800 in income taxes this year. If the above circumstances are true, (they are to the best of my ability to list them)
What would be my approximate refund/liability???
Submitted: 5 years ago.
Category: Tax
Expert:  jgordosea replied 5 years ago.

Greetings,

 

Are you paying for the energy saving items that are eligible for the tax credits or are all of the improvements being paid by the insurance reimbursements?

 

Have you previously claimed any tax credit for energy savings (since there can be limits in total you can claim)?

 

Are you usually subject to Alernative Minimum Tax (as computed on Form 6251) ?

 

This information will help to give a correct answer.

 

Thank you.

 

 

 

 

Customer: replied 5 years ago.

Not sure how to do this, but I did send reply in this venue. Did you get it? I think I did it wrong. Answers are

1. Insurance paid us off as an entire loss. We could have taken money, and purchased a trailer and lived in it with all the rest of the money in savings account--we chose to build house.

2. A couple of years ago, we claimed some insulation installed and got a $600 deduction/credit.

3. Don't know. I can't even look it up as all records were burned. Short answer is I do not think so, as until I retired 3 years ago, I earned about $60,000 and paid all taxes based on that. The last 3 years, I paid according to my $22,000 retirement payments.

I just realized at 5 A.M. that I did not list the cost of the windows/doors. They can be documented at a little under $20,000. There were other things that did qualify for the "green money" but I believe there is a $1500 limit on these compiled. I was told that the GEO is a 30% credit--is this true and how will it affect the refund and the original question, approximately (within $300 to $500) what will my refund/liability be based on the submitted data.

Expert:  jgordosea replied 5 years ago.

Hello again,

 

Sorry to say, but that energy credit is only available for improvements to existing homes or can be claimed by the contractor of new construction.

 

From http://www.irs.gov/irb/2009-25_IRB/ar10.html

 

"1) Requirements to Claim the Credit. A taxpayer may claim a credit under § 25C with respect to amounts paid or incurred for an item of property only if each of the following requirements is satisfied:

(a) The item is installed in or on a dwelling unit located in the United States and, at the time of installation, the dwelling unit is owned and used by the taxpayer as the taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only available for existing homes. See § 45L for the credit applicable to new homes.

(b) The original use of the item commences with the taxpayer."

 

Internal Revenue Code:Sec. 45L. New Energy Efficient Home Credit can be claimed by the contractor of a new home.

"1) ELIGIBLE CONTRACTOR- The term `eligible contractor' means--
(A) the person who constructed the qualified new energy efficient
home, or
(B) in the case of a qualified new energy efficient home which is a
manufactured home, the manufactured home producer of such home"

 

I hope this helps to know the regulations even though you would rather have been able to claim this credit.

Customer: replied 5 years ago.

Lets put this into language that a normal person can understand.

Are you saying that I do not qualify for these deductions.

If not, specifically why.

Things to consider:

I was the general contractor for a new home that was built for my family and myself.

I did install the "energy efficient" things that do qualify.

When I get the answer to these questions, I will accept the conclusions, regardless of whether or not I like them.

Expert:  jgordosea replied 5 years ago.

Hello again,

 

In plain language new homes have to qualify for the section 45L credit on different criteria than just having the improvements (such as windows) that are included in the 25C credit.

That is, it is the entire energy saving of the new structure rather then a component that is installed as an improvement that allows for a credit.

 

The new construction must have a level of annual heating and cooling energy consumption which is at least 50 percent below the annual level of heating and cooling energy consumption of a comparable dwelling unit as detailed in Internal Revenue Code:Sec. 45L. New Energy Efficient Home Credit

 

There is approved software for the contractor to compute if the new home can qualify. See http://www.irs.gov/businesses/small/industries/article/0,,id=155445,00.html

 

So, there is a process by which the contractor of a new home can qualify; but there is no credit for certain items installed. Rather, it is based on the energy comsumption of the new home in total.

 

I hope this helps to clarify the difference in energy credit qualification for new homes.

 

 



Edited by John Gordos EA on 11/12/2009 at 1:05 PM EST
jgordosea, Enrolled Agent
Category: Tax
Satisfied Customers: 3069
Experience: I've prepared all types of taxes since 1987.
jgordosea and 2 other Tax Specialists are ready to help you
Expert:  jgordosea replied 5 years ago.

Hello again,

 

Based on your feedback it seems you were not yet clear that new construction does not qualify for any energy credit because of which items are installed (building insulation, exterior windows, doors, and skylights, certain central air conditioners, and natural gas, propane or oil water heaters, etc.) That credit is only available for existing homes.

 

The credit that is allowed for a new home can only be claimed by the contractor of the new home. The credit for a new home is allowed if the total energy consumption of the new home is at least 50 per cent less than a comparable dwelling. Approved software must be used to compute if the credit is allowed. This credit would offset the contractor's income from building the new home.

 

Did you have another question?

 

Customer: replied 5 years ago.

Do you mean that all the "green money" that is being advertised as being available to people who add these items to their homes as they build them. I specifically have been told that the Geothermal was available for 30% rebate or credit. Also, because I am my own "general contractor" and basically did it all myself, I am not allowed these tax allowances?? all I can get from you is that the tax credits that were available in 2006-7-and 8 are about. Are you telling me that I am not allowed these allowances that have been so heavily advertized--new in 2009?

I have been trying to get that answer and cannot. BUT---I specifically told them to pay you. you only have been quoting from these older tax laws and will not seem to separate them. or at least you only refer to laws that have been on the books for several years, not the new stimulation money. TELL THEM TO PAY YOU---

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jgordosea
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I've prepared all types of taxes since 1987.