DOE say no 30% tax credit on fuel...

szmaine · Dec 16, 2009

The DOE tax credit website has had some recent updates. For one, they want to make sure that no one tries to claim the tax credit on their pellets or wood - :roll: just sayin', I guess.

Yes, biomass stoves can qualify for a tax credit.

How much:
30% of the cost of the stove (including installation/labor costs), up to $1,500. The cost of the fuel is not included.

But this is also new -

Which components associated with my product are also eligible for the tax credit?

Question
I’m buying a new product that qualifies for the tax credit. How do I know which components associated with it are also eligible for the credit? For example, for a qualified roof, would the nuts & bolts, and gutter be included? For a biomass stove, would the hearth, stovepipe, and chimney be included?

Answer
IRS has not issued specific written guidance on this question.

The rule of thumb that has become informal IRS guidance is that if the component is a critical piece of the product's energy efficiency then it is covered, but if it’s the same component that you would use on a non-qualified product (a regular roof), then it would not be covered.

The following products are probably not covered by the tax credit:

nuts & bolts, and gutter for a new roof
hearth, stovepipe or chimney for a biomass stove
new ducts for an air conditioner or furnace
You can also contact the IRS directly: www.irs.gov/contact

Boldface added by me.
The IRS form is still showing up as a DRAFT copy so I assume that this aspect is still up in the air.

http://www.energystar.gov/index.cfm?c=tax_credits.tx_index

Slow1 · Dec 16, 2009

Now I can see the argument about the hearth not counting, but the stovepipe/chimney is very much a critical piece for the products energy efficiency - don't do the liner/pipe correctly and you won't get the proper efficiency out of your stove.

Obviously this will come down to arguments until enough case law has been settled. Thus the "probably" in there eh?

Oh how I love tax law (not).

cycloxer · Dec 16, 2009

Yup, you can't run your EPA stove w/o those components. I file my own taxes and I have all of my receipts and I will be including all of the installation materials required to install the stove. If I had hired a stove shop to perform the install they would have charged me for all of the materials plus their labor. Those were my installation costs and they are permitted. I won't be claiming accessories or fuel of course. That's how I interpret the requirement and I did read through the IRS publication.

Deron · Dec 16, 2009

Well since the tax credit is geared towards a two fold scenario of:

A. increasing efficiency of ones heating scenario

B. reducing emissions -- environmental friendly setup

Can't really blame them if they deny eligibility it based on it not being setup to be environment friendly...that's the whole
point of the tax credit. From what I've read the liner and install of liner IS included within the tax credit umbrella.

Slow1 · Dec 16, 2009

Clearly some folks will try and abuse this. As an example with an EPA stove someone could go and install a new brick chimney then line it with a SS liner and claim the whole thing instead of doing a simple SS Class A. I would not blame an auditor for nixing the brick chimney portion of the expense as unnecessary for the stove. But only time will tell how close the IRS will look at these things and what lines will be drawn. Given that no receipts have to be submitted with the actual claim it will take an audit to even look at what specifically is being claimed in the first place before any questions could be asked so many folks will likely try (and get away with) all sorts of questionable claims here. Doesn't make it right, just is what it is. Stimulus!

Deron · Dec 16, 2009

Slow1 said:
Clearly some folks will try and abuse this. As an example with an EPA stove someone could go and install a new brick chimney then line it with a SS liner and claim the whole thing instead of doing a simple SS Class A. I would not blame an auditor for nixing the brick chimney portion of the expense as unnecessary for the stove. But only time will tell how close the IRS will look at these things and what lines will be drawn. Given that no receipts have to be submitted with the actual claim it will take an audit to even look at what specifically is being claimed in the first place before any questions could be asked so many folks will likely try (and get away with) all sorts of questionable claims here. Doesn't make it right, just is what it is. Stimulus!

It's a 30% credit, but it maxs out at $1,500, so anything over 5K is on the homeowner.

Good luck getting a new stove, liner, install and a new chimney for under that.

Greg123 · Dec 16, 2009

I know they are not the IRS but I looked at the Hearth, Patio & Barbecue Associations web site. Bold part was added by me.

"Purchasers of qualifying stoves and inserts can claim the credit on their federal tax return. These consumers should save their receipt and the manufacturer's certification that states the appliance they purchased is eligible. Installation and venting costs are included in calculating the credit's total value, as long as professional installation is required for the proper and safe operation of the stove."

Slow1 · Dec 16, 2009

Deron said:
Slow1 said:

Clearly some folks will try and abuse this. As an example with an EPA stove someone could go and install a new brick chimney then line it with a SS liner and claim the whole thing instead of doing a simple SS Class A. I would not blame an auditor for nixing the brick chimney portion of the expense as unnecessary for the stove. But only time will tell how close the IRS will look at these things and what lines will be drawn. Given that no receipts have to be submitted with the actual claim it will take an audit to even look at what specifically is being claimed in the first place before any questions could be asked so many folks will likely try (and get away with) all sorts of questionable claims here. Doesn't make it right, just is what it is. Stimulus!

Click to expand...

It's a 30% credit, but it maxs out at $1,500, so anything over 5K is on the homeowner.

Good luck getting a new stove, liner, install and a new chimney for under that.

True enough. Take an upgrade scenario however and you can see that someone can buy a stove for $2K and have $3K left over to spend - now they say, well, I can spend the additional toward something else... now what do I want done that MIGHT be related somehow? That is where the line is crossing in my _Opinion_.

Oh well, enough thought on this, folks make their own decisions and do what they will. Act in good faith here and do what is necessary to get the stove installed safely without trying to pad the bill and I bet folks will make out fine.

szmaine · Dec 16, 2009

Greg123 said:
I know they are not the IRS but I looked at the Hearth, Patio & Barbecue Associations web site. Bold part was added by me.

"Purchasers of qualifying stoves and inserts can claim the credit on their federal tax return. These consumers should save their receipt and the manufacturer's certification that states the appliance they purchased is eligible. Installation and venting costs are included in calculating the credit's total value, as long as professional installation is required for the proper and safe operation of the stove."

I went to HPB faq on the tax credit http://www.hpba.org/consumers/hearth/tax-credit-information/hpba-tax-credit-faq-fact-sheet
and saw:

Are installation costs included in this tax credit?

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove.

Where are you getting this quote that includes the language on venting?

I did also see this, addresses possible the installation cost of the liner but not the cost of liners, caps, etc..

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove. The IRS is silent on the possible need to replace a chimney when upgrading an existing biomass stove; however, the EPA has a section on its website titled, Installation Affects Efficiency, which retailers and consumers should consult when deciding if a chimney replacement is warranted when installing a biomass stove.

Greg123 · Dec 16, 2009

szmaine said:
Greg123 said:

I know they are not the IRS but I looked at the Hearth, Patio & Barbecue Associations web site. Bold part was added by me.

"Purchasers of qualifying stoves and inserts can claim the credit on their federal tax return. These consumers should save their receipt and the manufacturer's certification that states the appliance they purchased is eligible. Installation and venting costs are included in calculating the credit's total value, as long as professional installation is required for the proper and safe operation of the stove."

Click to expand...

I went to HPB faq on the tax credit http://www.hpba.org/consumers/hearth/tax-credit-information/hpba-tax-credit-faq-fact-sheet
and saw:

Are installation costs included in this tax credit?

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove.

Click to expand...

Where are you getting this quote that includes the language on venting?

I did also see this, addresses possible the installation cost of the liner but not the cost of liners, caps, etc..

Yes. Installation costs are included as long as professional installation is required for the proper and safe operation of the stove. The IRS is silent on the possible need to replace a chimney when upgrading an existing biomass stove; however, the EPA has a section on its website titled, Installation Affects Efficiency, which retailers and consumers should consult when deciding if a chimney replacement is warranted when installing a biomass stove.

Click to expand...

Here is the link
http://www.hpba.org/media/news/tax-credit-makes-wood-stoves-and-fireplace-inserts-more-affordable

cycloxer · Dec 16, 2009

As long as your installation costs are reasonable, even if you were to be audited, you could defend yourself. That's how I look at it. I consider items like stainless liners, block off plates, chimney caps, and insulation to be reasonable items required for the proper installation of your stove. You cannot run the stove without them and I would have no problem taking the time to explain that to an auditor. It gets more questionable when you try to claim things like a completely remodeled schnazzy hearth. However, if you need to do something like extend the hearth or build a new wall as a shield because the existing one does not meet the clearances or is not up to code, I would claim that as well. Nevermind, I did my own install so I am claiming about 1/2 of what somebody else would be claiming who hired a professional.

Hey, next year they are talking about increasing this to 50%, so programs like these are only going to increase and get even more complicated. Cash for Caulkers !!!

Go Obama

Deron · Dec 16, 2009

cycloxer said:
As long as your installation costs are reasonable, even if you were to be audited, you could defend yourself. That's how I look at it. I consider items like stainless liners, block off plates, chimney caps, and insulation to be reasonable items required for the proper installation of your stove. You cannot run the stove without them and I would have no problem taking the time to explain that to an auditor. It gets more questionable when you try to claim things like a completely remodeled schnazzy hearth. However, if you need to do something like extend the hearth or build a new wall as a shield because the existing one does not meet the clearances or is not up to code, I would claim that as well. Nevermind, I did my own install so I am claiming about 1/2 of what somebody else would be claiming who hired a professional.

Hey, next year they are talking about increasing this to 50%, so programs like these are only going to increase and get even more complicated. Cash for Caulkers Go Obama

Exactly, as long as someone is not trying to blatantly cheat and deduct irrelevant items there will be no problem.

One only gets in deep trouble with the IRS when they cross the line between an honest mistake and outright fraud.

It's perfectly legal to avoid paying taxes, but illegal to evade them.

Nic36 · Dec 17, 2009

That site claims that:

The tax credit - which can lower your tax bill on a dollar-for-dollar basis - applies to stoves or fireplace inserts purchased between January 1, 2009 and December 31, 2010.

I thought it was more the "installation" that fit that criteria, and not when you buy? For example, if you buy a qualifying stove in Decemeber 2008, but install it in March 2009.

cycloxer · Dec 17, 2009

It is the date it was put into service. ie, if you bought a stove in December of '08, but did not install it and put it into service until Jan '09, it qualifies.

Nic36 · Dec 17, 2009

cycloxer said:
It is the date it was put into service. ie, if you bought a stove in December of '08, but did not install it and put it into service until Jan '09, it qualifies.

Oakie Doakie, thought so, thanks for the clarification.

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DOE say no 30% tax credit on fuel...

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