Residential Energy Credits

[tpnl]

Client had a fire in main home. With his insurance check, he put in some windows, water heater, furnace. Home repair guy told him he would not qualify for credit (because of the insurance involvement) even though all products were energy star certified. Contractor would not give him any receipts because of last statement.

I disagree with contractor. No where did I see where you could not claim credit because they were paid with insurance money. I do, however, have to reduce the basis of the home with any credit claimed. Any other opinions?

[Kram BergGold]

just an opinion

If client has a taxable insurance gain I would take the credits up to tthe gain. If he has no gain or a loss I would not take the credits.

[ChEAr$]

it's hard to believe what advice our clients get from time to time. I wonder if that
contractor who said "no credits" prepares tax returns.

If he does, he shouldn't.

However, I wonder if the contractor was paid directly from the insurance company for the work.
That might explain his opinion.

However if the insurance company paid the proceeds directly to the policyholder, the credit is
certainly had by the client.

[tpnl]

Question

If the check went directly to contractor, who gets the credit? Not the contractor, they were not installed in his main home and he did not manufacture the stuff.

When a person buys a home and the money goes from bank to seller, the buyer (if qualified) gets the first time home buyer. Is this not the same?

How would this be different?

[ChEAr$]

If the check went directly to contractor, who gets the credit? Not the contractor, they were not installed in his main home and he did not manufacture the stuff.

When a person buys a home and the money goes from bank to seller, the buyer (if qualified) gets the first time home buyer. Is this not the same?

How would this be different?

I think the contractor in giving this "advice", rather opinion, is relying on the fact that if he
got the check directly from insurance company, the taxpayer didn't actually pay it himself.
Certainly there's no credit for the contractor, we know that.

(Maybe the contractor has a storefront with a sign "Joe Smith's Energy, Insulation and Tax office" somewhere downtown.)

You can't compare this to the homebuyer's credit, for the rules there are spelled out by our congress. If you look for consistency in every tax law, you'll be sorely disappointed.
Anyway, when a person buys a house/home, he actually pays the whole amount, 100%.
Funding via a mortgage is just a convenience when they send their check to the seller.

[tpnl]

Thanks

I appreciate your help. I'll keep looking for an answer.