According to IRS instructions for Form 5695 (Residential Energy Credits), you generally cannot claim a Residential Energy Credit for property installed in a home located outside the United States. Both major credits claimed on this form require that the qualifying property be installed in connection with a dwelling unit located in the United States.
- For the Energy Efficient Home Improvement Credit (§25C), the property must be installed on or in connection with your main home located in the United States.
- For the Residential Clean Energy Credit (§25D), the property must be installed on or in connection with a dwelling unit located in the United States. This can include a primary or secondary home; however, fuel cell property is limited to a main home.
Key Requirements for Eligibility
- Home Location: The home must be located in the United States. This includes houses, mobile homes, condominiums, and manufactured homes that meet applicable federal and state standards.
- Residential Energy Property: Qualified energy property (such as solar electric systems, solar water heating, geothermal heat pumps, small wind turbines, battery storage technology, or energy-efficient improvements like insulation and windows) must be installed on or in connection with a U.S.-located residence.
- Home Energy Audit: For the home energy audit credit under §25C, the audit must be performed on your main home located in the United States by a qualified home energy auditor.
- Qualified Fuel Cell Property: Fuel cell property qualifies only if installed on or in connection with your main home located in the United States.
Important Notes
- The credit is not available for expenditures made after December 31, 2025.
- Cost basis of your home must be reduced by the amount of any allowed residential energy credit.
Source:
Form 5695 Instructions (2025)
Disclaimer: Always verify eligibility and requirements with the current year’s IRS forms and instructions, as well as your state’s Department of Revenue. Tax laws and eligibility criteria may change annually.