Code 25-C Interpretation for Appliances

[Consultant]

Do any appliances qualify for the 25-C Energy efficient? Washers, Dryers, fridge, etc.
If so, do they need an Energy Star rating label? Where on Form 5695 does it go?

[New York Enrolled Agent]

Question 1 - NO

Other questions are therefore moot.

[TaxGuyBill]

I agree with New York Enrolled Agent that the context and intent of the law seems to not include appliances like that.

However, the literal reading if it seems to include refrigerators/freezers, which are electric heat pumps. While I haven't looked too hard, I haven't seen anything official that disallows the credit for refrigerator or freezer.

With that being said, as I said before, the context and the intent of the law seem to not include such appliances. I highly suspect that if audited, the credit would be denied by the auditor and probably denied the courts.

[DoubleO]

I agree with New York Enrolled Agent that the context and intent of the law seems to not include appliances like that.

However, the literal reading if it seems to include refrigerators/freezers, which are electric heat pumps. While I haven't looked too hard, I haven't seen anything official that disallows the credit for refrigerator or freezer.

With that being said, as I said before, the context and the intent of the law seem to not include such appliances. I highly suspect that if audited, the credit would be denied by the auditor and probably denied the courts.

I would be livid if I asked my heating and air conditioning guy to install an electric heat pump and he brought me a refrigerator.



Seriously, when I look up “electric heat pump,” definitions state it is part of a home heating/cooling system and is installed outside the home. I don’t rely on my refrigerator or freezer to heat or cool my home. My food, yes.

[DoubleO]

My laughing emojis disappeared in my previous text.

[Rapid Robert]

"refrigerators/freezers, which are electric heat pumps"

While the same laws of physics apply, neither an air conditioner nor a refrigerator pump heat anywhere in any useful way. However central (not room) air conditioners are specifically listed in 25C, while refrigerators are not. A refrigerator just re-distributes the heat that is already present inside your home.

As a side note, when removing a hydronic heating system from my house over 20 years ago, it turned out the best solution for one large, lesser-used area (400 sq. ft.) was a PTAC unit, otherwise known as the heating/cooling unit you've probably seen in every motel room you've ever stayed in. At the time, the PTAC was offered with a heat pump option, so that at certain levels of outdoor temperature, the heating would automatically shift from pure electric resistance to heat pump mode, which of course was just the air conditioning function blowing in reverse. I don't recall that any energy tax credit was available back then, but an unexpected bonus was that even though the rest of my house has gas-furnace heating, having this PTAC installed led to a special lower electric billing rate during the winter months from my utility for having an electric heat source.

I don't recall it ever needing maintenance, and still running fine after two decades.

[TaxGuyBill]

"refrigerators/freezers, which are electric heat pumps"

While the same laws of physics apply, neither an air conditioner nor a refrigerator pump heat anywhere in any useful way.

A refrigerator just re-distributes the heat that is already present inside your home.

Are you saying that removing the heat from the refrigerator body is not useful?

Both a traditional air conditioner and refrigerator are heat pumps; they move heat from one area to another.

A heat pump water heater just re-distributes heat that is already inside your home too. But nobody argues that isn't a heat pump (and it specifically qualifies for the tax credit).

But as I said, the context of the law makes it fairly clear the credit is referring to the HVAC definition of heat pump.

[Rapid Robert]

TGB, I don't think we have a major disagreement, just quibbling over details (which is fine, it's a tax forum after all). I am glad you brought the topic up for discussion, and agree with your conclusion, I just get there by different reasoning.

Idea: maybe a clear basis for proper treatment should be based on whether the unit is a permanent installation or an appliance that can be unplugged and rolled out the door. Central air and water heaters are permanent; refrigerators, washers, dryers generally are not.

I'm saying that the heat pumped out of a refrigerator is not useful, just like the heat pumped out of an air conditioner is not useful. They should more accurately be called cold pumps.

As for the water heater, well it depends on where the water heater is located, doesn't it? Mine is in the garage, which is not heated. Similarly a water heater in the basement might not enjoy a year-round comfortable room temperature

Heat pumps are more or less efficient based on the difference in the two temperatures (input and output).(*) A water heater in a closet next to your kitchen won't perform as well as one located in an unheated indoor area. The inside water heater is basically just like an air conditioner pumping cold air into your house, which then must be offset by some other heating source when outdoor temperatures are colder (i.e. winter). At least with the refrigerator, the heat pumped out is not lost. However with a water heater, vast amounts of heat energy are just wasted down the drain every time you take a shower or run the dishwasher/clotheswasher.

(*)https://en.wikipedia.org/wiki/Carnot_cycle