Consumer tax credit for used stoves? Help clear this up

[dvellone]

Short of consulting a tax professional, I'm having trouble determining if the tax credit for qualified biomass appliances applies to used wood stoves. I contacted Jotul to inquire about certification for older models and they referred me to current certification as being applicable to models that have not changed in design or efficiency.

Chimneysweep online states that the credit specifically applies only to purchases of new stoves and not to second-hand purchases, but I haven't been able to find this language on the IRS website.

 

[BrotherBart]

I respectfully disagree with our friend Tom. There is not one word in the legislation that requires that the stove be "new". New to you yes, a new stove no. It just has to be one that has a certificate available from the vendor. The purpose of the legislation is to get more energy efficient appliances into your house. Not to buy Christmas presents for stove dealer's kids. :coolsmirk:

I would get a receipt to verify that it was a recent purchase, not one you had already.

 

[ROYJ24]

Let's meet in a dark alley, the stove dealer & I fake papers.

 

[vovo222]

Actually, as I read it, there is nothing in the stimulus bill wording that specifies a new stove. As long as it meets the efficiency rating and the mfr. has issued a letter of compliance for a current stove model (which should implicate the older versions with equivalent EPA ratings), its probably not going to be an issue. The key point is that it is being installed in a home that has not already had a stove installed in it, and that the taxpayer is the registered homeowner. You'll want to have a building permit approving the installation to cover both of those points.

The main idea was to get fuel-efficient heating into homes ASAP and reduce energy dependence on oil, not to stimulate upgrades.

 

[Wet1]

The main idea was to get fuel-efficient heating into homes ASAP and reduce energy dependence on oil, not to stimulate upgrades.

Maybe, maybe not. I think stimulation had a lot to do with it. This incentive wasn't around last year...

BTW, I agree with the others. I cant find anything spelled out after a quick look on the IRS website that states the stove must be purchased new, but I strongly suspect that was the intent of the legislation. I don't think I'd want to argue this one with the IRS.

 

[BrotherBart]

The IRS has to follow the law like everybody else. I have read the entire bill passed into law and there is no requirement for the stove to be new.

As they impress upon you in law school:

When the law is on your side, pound on the law.

When the evidence is on your side, pound on the evidence.

When neither the law nor the evidence is on your side, pound on the table.

 

[MountainStoveGuy]

I think as long as the current model number on the used stove matches the model on the approved stove, you would be golden.

 

[John Ackerly]

I've also tried to ask folks at EPA and HPBA, but as far as I can tell, there is no reason you can't claim the tax credit as long as the company has certified that the exact stove you bought second hand is 75% efficient. This means of course that the same stove still has to be produced and sold today. Make sure to keep the manufacturer certification in your records, and get the person who sells it to type out a receipt, confirming what you purchased and when.

 

[dvellone]

The IRS has to follow the law like everybody else. I have read the entire bill passed into law and there is no requirement for the stove to be new.

As they impress upon you in law school:

When the law is on your side, pound on the law.

When the evidence is on your side, pound on the evidence.

When neither the law nor the evidence is on your side, pound on the table.

BrotherBart, I'm not the kind of guy to get a tattoo, but you've just inspired me.

 

[wsorg]

If you have a EPA certificate, you should be OK.

 

[Chargerman]

Hope this doesn't rain on the wood pile...but I think under Part 3 Section 2 .05 (1) (b) the IRS covers it:

.05 General Provisions. Under all three of the acts, EPACT, EIEA, and ARRTA,
the following provisions apply:
(1) Requirements to Claim the Credit. A taxpayer may claim a credit under
§ 25C with respect to amounts paid or incurred for an item of property only if each of the
following requirements is satisfied:
(a) The item is installed in or on a dwelling unit located in the United States and,
at the time of installation, the dwelling unit is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only
available for existing homes. See § 45L for the credit applicable to new homes.
(b) The original use of the item commences with the taxpayer.

From reading that I would think "original use" would almost rule out any "used" stoves.

Here is the link so decide yourself.

http://www.irs.gov/pub/irs-drop/n-09-53.pdf

 

[thechimneysweep]

Honey, howcome nobody ever listens to me?



... Honey?

 

[johnn]

And "Honey" replies: Darling,,when we were down to nothing,,nothing sure looked good on you.
BTW i read a lot of your stuff,,thanks for your time

 

[tradergordo]

The reason it only applies to the first person to put the stove into use is because otherwise people could legally game the system, I buy it, sell it to you, you sell it to someone else, etc. 10 people might claim the tax credit on the same stove purchase.

 

[dvellone]

The reason it only applies to the first person to put the stove into use is because otherwise people could legally game the system, I buy it, sell it to you, you sell it to someone else, etc. 10 people might claim the tax credit on the same stove purchase.

Yeah, and that would be unethical unlike state tax on a used car that changes hands several times. This is probably an "ash can" topic ;-)

 

[MountainStoveGuy]

Hope this doesn't rain on the wood pile...but I think under Part 3 Section 2 .05 (1) (b) the IRS covers it:

.05 General Provisions. Under all three of the acts, EPACT, EIEA, and ARRTA,
the following provisions apply:
(1) Requirements to Claim the Credit. A taxpayer may claim a credit under
§ 25C with respect to amounts paid or incurred for an item of property only if each of the
following requirements is satisfied:
(a) The item is installed in or on a dwelling unit located in the United States and,
at the time of installation, the dwelling unit is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only
available for existing homes. See § 45L for the credit applicable to new homes.
(b) The original use of the item commences with the taxpayer.

From reading that I would think "original use" would almost rule out any "used" stoves.

Here is the link so decide yourself.

http://www.irs.gov/pub/irs-drop/n-09-53.pdf

Great post charge, i have looked for wording like this and did not find a thing. Seems this issue is over.

 

[Nonprophet]

Hope this doesn't rain on the wood pile...but I think under Part 3 Section 2 .05 (1) (b) the IRS covers it:

.05 General Provisions. Under all three of the acts, EPACT, EIEA, and ARRTA,
the following provisions apply:
(1) Requirements to Claim the Credit. A taxpayer may claim a credit under
§ 25C with respect to amounts paid or incurred for an item of property only if each of the
following requirements is satisfied:
(a) The item is installed in or on a dwelling unit located in the United States and,
at the time of installation, the dwelling unit is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only
available for existing homes. See § 45L for the credit applicable to new homes.
(b) The original use of the item commences with the taxpayer.

From reading that I would think "original use" would almost rule out any "used" stoves.

Here is the link so decide yourself.

http://www.irs.gov/pub/irs-drop/n-09-53.pdf

Great post charge, i have looked for wording like this and did not find a thing. Seems this issue is over.

If this is what it seems to be, then that truly is a travesty in my book. We really do live in a throw-away society and this interpretation of the tax break only confirms that. The main point of the tax break SHOULD be to increase energy efficiency, not to increase the sales of new stoves. I wonder if stove manufacturers and/or dealers had a hand in crafting this specific language--that one sentence in theory means millions of dollars more for stove manufacturers and dealers..........

I'm all for economic stimulus, but just like the cash for clunkers program, a lot of serviceable, fully usable units are going to get crushed/scrapped just to feed the economic machine that thrives on sales of anything "new" no matter what the long-term environmental costs are.

How many 70% efficient stoves are going to the dump or the scrap yard so people can upgrade to a newer, shinier model?? How many tons of steel and how many million gallons of water go into making new stoves?

Our 1992 Earthstove may only be 69% efficient, but it only cost us $80, it burns clean, and it works great. Yes, it's tempting to get a shiny new Jotul, or Woodstock, etc but I'd rather keep the extra couple grand in my pocket while getting the full life out of a well-designed and fully functional wood stove.


NP

 

[szmaine]

Hope this doesn't rain on the wood pile...but I think under Part 3 Section 2 .05 (1) (b) the IRS covers it:

.05 General Provisions. Under all three of the acts, EPACT, EIEA, and ARRTA,
the following provisions apply:
(1) Requirements to Claim the Credit. A taxpayer may claim a credit under
§ 25C with respect to amounts paid or incurred for an item of property only if each of the
following requirements is satisfied:
(a) The item is installed in or on a dwelling unit located in the United States and,
at the time of installation, the dwelling unit is owned and used by the taxpayer as the
taxpayer's principal residence (within the meaning of § 121). Thus, the credit is only
available for existing homes. See § 45L for the credit applicable to new homes.
(b) The original use of the item commences with the taxpayer.

From reading that I would think "original use" would almost rule out any "used" stoves.

Here is the link so decide yourself.

http://www.irs.gov/pub/irs-drop/n-09-53.pdf

Great post charge, i have looked for wording like this and did not find a thing. Seems this issue is over.

If this is what it seems to be, then that truly is a travesty in my book. We really do live in a throw-away society and this interpretation of the tax break only confirms that. The main point of the tax break SHOULD be to increase energy efficiency, not to increase the sales of new stoves. I wonder if stove manufacturers had a hand in crafting this specific language......I'm all for economic stimulus, but just like the cash for clunkers program, a lot of serviceable, fully usable units are going to get crushed/scrapped just to feed the economic machine that thrives on sales of anything "new" no matter what the long-term environmental costs are.

How many 70% efficient stoves are going to the dump or the scrap yard so people can upgrade to a newer, shinier model?? How many tons of steel and how many million gallons of water go into making new stoves?

Our 1992 Earthstove may only be 69% efficient, but it only cost us $80, it burns clean, and it works great. Yes, it's tempting to get a shiny new Jotul, or Woodstock, etc but I'd rather keep the extra couple grand in my pocket while getting the full life out of a well-designed and fully functional wood stove.


NP

I hear you - but, unlike cash-for-clunkers, no one is obliged to scrap their older models. This, potentially, means that alot of good used stoves will be up for sale
that people whom could not afford a brand new stove even with the tax credit (or not even making enuf income = no tax liability=no money back) may then purchase - people who have no stove or a truly ready to scrap unsafe stove.
That's how you got your perfectly usable $80 stove, someone sold it to you, yes? Happily for all.

 

[afblue]

So what your saying if I had an EPA rated stove I could sell it to someone, they claim the tax credit, then I go out and buy a new stove as an upgrade, and I get to claim the tax credit too? Wow thats wonderful, The net gain in the system is one new EPA rated stove but they paid out 2 stimulus credits. No wonder our country is going up in a flaming mess. $282 billion on economic stimulus, and it created roughly 600,000 jobs, WTF why dont they just write those people a $470,000 check each and call it a day. Or how about cash for clunkers, $4500, incremental costs for the bill turned into the govt paying out $24,000 per car traded in under that bill. Obviously I am a little upset about not seeing a single penny of those bills. But I am getting my $1500 credit for my new stove and $8k for my first time home buyers, while also praying this administration doesnt drive us head first into the ground before I have my first child

 

[dvellone]

I hear you - but, unlike cash-for-clunkers, no one is obliged to scrap their older models. This, potentially, means that alot of good used stoves will be up for sale
that people whom could not afford a brand new stove even with the tax credit (or not even making enuf income = no tax liability=no money back) may then purchase - people who have no stove or a truly ready to scrap unsafe stove.
That's how you got your perfectly usable $80 stove, someone sold it to you, yes? Happily for all.

You're right that stoves unlike clunkers will not be scrapped, but for every individual getting a great deal on a used stove (which isn't eligible for the tax credit even though it is compliant to the efficiency standard), there's a seller taking a big hit to be able to offer the stove at a price that can compete with an eligible stove after the credit.
So, as usual when money, or savings in this regard goes in someone's pocket, money has to come out of someone else's. My used stove sits unsold and will remain so because I would have to price it much lower than it's worth to be able to sell it.