Residential Energy Credit

[Snaggletooth]

Old Credit; Form 5695

Bart, the only "residential energy credit" I remember was in the 1980s. Form 5695, which I think has been around ever since for obscure credits. Big time credit for things such as changing your heating system efficiency, weatherstripping, windows and insulation. I took it one year myself. The credit was substantial, like 20% if I remember correctly.

One of my long-time customers has an insulation business. That thing expired in 1986 or thereabouts and he was swamped by people wanting to get their house insulated by December 31.

I don't know what happened to form 5695 because after it expired I quit using it. But I think, like the investment credit, there were still freak situations (historical things, low-income housing, blah, blah) where it could be taken. The form has been resurrected for 2006, but I'm very much like yourself -- afraid people who routinely replace their hot water heater are going to be furious when I don't take the credit for them.

[Black Bart]

Old credit and new credit

...the only "residential energy credit" I remember was in the 1980s...has been around ever since for obscure credits...like the investment credit, there were still freak situations (historical things, low-income housing, blah, blah) where it could be taken. The form has been resurrected for 2006, but I'm very much like yourself -- afraid people who routinely replace their hot water heater are going to be furious when I don't take the credit for them.

That's what I was thinking -- that there was nothing new for '05 except they still had the same old shell of a credit for oddball situations and which were very rarely used.

What got me to wondering was that a client brought in an $8,900 bill yesterday for energy-efficient exterior windows installed 10-'05. Since it was so late in that year, he decided he'd "hold off and take it in '06," as he put it (do-it-yourselfers -- what can you say?). Right away I was thinking 1040X because I remembered talking about it last year (guess that was about the anticipated '06 credit), but not actually taking any credits.

Anyway, he was very let-down when informed even if he had installed in '06; the max was $200 out of his near-nineK. Of course, window-guy told him it was fully deductible and he took that as gospel (wonder why nobody ever asks me for advice on installing windows?).

The credit's a good concept, but I kinda hated to see it revived because it's such a measly thing (10%) in light of the amounts spent, and for another, insulation installers and others are still using that 20-something year old credit as a selling point to peddle their "100% off your taxes" propaganda. Age has diminished that somewhat, but with the '06 credit being so widely-hyped (much ado about nothing), we're probably in for another 20 years or so of contractor-retailer misinformation.