Res Enery Credit

[JG EA]

I have a hopefully simple question. A client said they built a porch (like a sun room) onto their house and it has a new window in it. He said he would call the company from which he purchased and ask if it qualified. They told him the window qualified, but the this window did not because it wasn't a replacement window but on a new part of the house.

Am I going bonkers here? It is OK isn't it? In the instructions it says "improvement". Wouldn't this qualify?

[Koss]

Existing Dwelling

The credit in question is not available for new construction. Sounds like the vendor came to the conclusion that it didn't qualify because they think that adding a room to a house is new construction.

I don't think it's new construction. New construction in this context refers to building a new home on a vacant lot. Your client expanded, or improved, his principal residence.

The vendor apparently thinks that in order to qualify, you have to replace existing windows...

He should stick to installing windows, and let tax professionals determine when a credit is applicable.



BMK

[AJsTax]

I have had a couple

situations just like what you are quoting and after much research we came to the conclusion that the addition is new construction and not eligible. We AGREE with the vendor.

Now if you want to call it part of an existing home that is your call. The regs are not real clear. Just document why you think they qualify and if the IRS questions it (which I highly doubt) then you can defend your position and see what they say.

There are a lot more credits being taken by do it your-selfers for windows and doors that dont qualify and adding the installation costs than you can imagine. And hot water tanks?? what a battle. There are no hot water "tanks" that qualify, only insta hots as far as I know.

[JG EA]

Thanks so much. Well, I think since the client emphasized the energy saving benefits to the existing home because of the new porch, I think we'll take it! (I'm cerainly bold now that there is only 1 month or so to go.)
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Just found this also in instructions.

Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.

[RST]

Res. Energy Credit

The porch needes to be a heated space.

[JG EA]

The porch needes to be a heated space.

OK, missed that point. Where is it?

[Jesse]

The porch needes to be a heated space.

I don't think heat is a necessity. It can be improvements to your garage and your garage doesn't need to be heated.

[Gretel]

Thanks so much. Well, I think since the client emphasized the energy saving benefits to the existing home because of the new porch, I think we'll take it! (I'm cerainly bold now that there is only 1 month or so to go.)
_______________________

Just found this also in instructions.

Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.

I don't think the window in the addition qualifies. The way I understand above quote is this: Existing living space is totally remodeled including putting in new windows/doors. This is different then adding living space.

[Jesse]

Interesting....

I'm in agreement that new construction does not qualify, but adding to an existing home does qualify. I would take the credit.

[Gretel]

I'm in agreement that new construction does not qualify, but adding to an existing home does qualify. I would take the credit.

I just try to apply some logic (I know, I know...). Where is the line between "New Construction" for an existing home and "Repairs" (loosely used here. Three examples:

1. 3-bed room home adds 2 more bedrooms.

2. 1-bed room home adds 10 more rooms.

3. ?-bed room home adds sun-porch or another room.

What are the deciding factors? If one or more rooms are added? How big the original home was?