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In December of 2015, I had a new home A/C and furnace system installed. I wrote the check to the installer in January of 2016 for the job.

I just found out that in December of 2015, congress extended tax credits for energy efficiency improvements to the end of 2016 (including retroactively applying them to any 2015 purchases). I've (obviously) already filed my 2015 taxes, and I did not claim this credit since I was unaware. However, my new system is energy efficient enough to make me eligible.

Question: Can I claim this credit on my 2016 taxes since I didn't claim it in 2015? If not, do I need to amend my 2015 tax returns to get the credit? Is it worth it?

Instructions for the IRS form are here, if that helps: https://www.irs.gov/instructions/i5695/ch01.html#d0e53

I've scoured the IRS, and Energy Star sites, but I haven't been able to get a clear answer.

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While individuals are indeed typically on a cash basis, this particular credit is definitely interested in the year you installed the device, not the year you paid for it. See in the section defining 'costs':

Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or, in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.

And further:

Residential energy property costs are costs of new qualified energy property that is installed on or in connection with your main home that you owned during 2016 located in the United States.

While there is one line (that Peter refers to) that is not quite so clear, I would be concerned that the IRS's intent is for this to be based on the installation date, not the actual payment date. The definition of Costs as being treated "paid" upon installation seems like that is the clear intent, to me.

  • Yes, I think you're right, and I'm deleting my answer. I guess that as the year the work is completed is when the basis of the home would increase, that that's when they consider the money "spent". Or maybe just some legislator thought it sounded better that way. You may want to add in that the taxpayer should amend 2015 taxes to claim the credit. – Peter Cooper Jr. Aug 30 '17 at 17:50

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