Residential Energy Effecient Property Credit

[Bonnie]

Taxpayer has a new energy effecient water heater installed in existing home. They have a home warranty that pays most of the cost of the new water heater. There is a deductable that the taxpayer payes. Can they use the full amount of the cost of the water heater? Or if not can they use the deductable? Or can they not use the water heater for the credit since the warranty paid for it?

[taxea]

The Tax Book pg 11-14

[S T]

More info needed

Is it that the T/p had a Home Service Warranty on the residence (one of those annual plans on Appliances, etc) , and then the Home Service Warranty paid for the replacement of a "defective - malfunctioned-worn out" water heater? And that then the T/p had a dedutible that had to be paid such as $ 50- or $ 100, etc, and the Home Service Warranty then covered the difference of replacement and installlation?

I believe that is what you might be referring to in your OP -

Of course, you have to make sure that the Water Heater has met the specifications for Qualified Residential Energy Property. A good reference is http://www.energystar.gov/index.cfm?...edits.tx_index

TTB page 11-15 Chart lists Qualified Residental Energy Property which includes Water Heaters, for Materials and Labor Costs - --- however, if the T/P did not pay for the entire cost, I would believe it would be limited to the out of pocket expense (deductible)

Wonder what others might think?

Sandy

[dkss]

I agree with Sandy: IF the water heater qualifies for the energy credit, I would only take the amount they paid for it.

Debbie

[Bonnie]

Yes, Sandy you explained it much better than I did. That is exactly the situation. Homeowner paid a $55 dedcuctable and the homeowners warranty paid the remainder of the cost of the water heater. They do have the documentation that it meets the standards to be considered energy effecient property. I did read the info in the TB but just wasn't sure if the warranty paid most of the cost if they could take a credit for full amount, partial or what they were entitled to. Thank you