Do I need to own the home to qualify for the Residential Energy Credit?
Not always. Whether you must own the home depends on the specific energy credit being claimed on Form 5695 and the type of property installed. In general, you must pay the qualified expenses and meet the applicable residence and property requirements for the credit.
The credit is claimed on Form 5695 for eligible energy-related improvements or property installed in a qualifying residence located in the United States.
Ownership Requirement
Ownership requirements vary depending on the credit and the type of property installed.
Generally:
- You must have paid the qualified expenses.
- The property must be installed in a qualifying residence that meets IRS requirements.
- You cannot claim a credit for expenses paid by another person.
- You cannot claim a credit for property for which you did not bear the cost of the installation.
For certain credits reported on Form 5695, ownership of the residence is required. For others, a taxpayer who uses the residence as a home may qualify if all applicable IRS requirements are met.
Qualified Residence Requirement
For purposes of Form 5695, a home may include:
- House
- Houseboat that contains sleeping, cooking, and toilet facilities
- Mobile home
- Manufactured home
- Cooperative apartment
- Condominium
The residence generally must be located in the United States and meet the specific requirements applicable to the credit being claimed.
Placed in Service Requirement
To qualify:
- The qualifying property or improvement must be installed and ready for use during the tax year.
- The credit is generally claimed for the tax year in which the property is placed in service.
- The property must meet all applicable efficiency, certification, and qualification requirements under the Internal Revenue Code and IRS guidance.
Joint Ownership / Multiple Taxpayers
When more than one taxpayer owns or occupies a qualifying residence:
- Each taxpayer may generally claim the credit only for the portion of qualified expenses that he or she actually paid.
- Married taxpayers filing a joint return generally combine their qualified expenses and claim the credit on a single Form 5695.
- Co-owners filing separate returns generally allocate the expenses based on the amount each taxpayer paid.
Important Note
Form 5695 is used to claim both the Residential Clean Energy Credit and the Energy Efficient Home Improvement Credit. The eligibility, ownership, and residence requirements can differ depending on the specific credit and type of property installed. Review the Form 5695 instructions carefully to determine whether ownership of the residence is required for your particular situation.
Source:
Form 5695.pdf
Disclaimer: Always verify details with the current year’s IRS Form 5695 and its instructions, as well as your state’s Department of Revenue guidelines. For complex situations, consult a tax professional or attorney.