How do you get a tax credit for a tankless water heater? And just what is a tankless water heater? Lets talk it out.
Tankless water heaters are a relatively new technology that replace the tank-style water heater for a more efficient set up. With a tank-style water heater, the water has to be heated continually so that’s it ready to use, but this is a huge waste of energy. Tankless water heaters pass water through a heating element as it’s needed, and not before. Using one will reduce your monthly energy bill, and some people have seen huge monthly savings.
Considering that paying for water is going to get more expensive each passing year from this point on, investing in ways that conserve is going to be a popular route.
There are electric, propane, oil, and gas run tankless water heaters. Sadly, electric tankless water heaters do not count for the energy tax credit for tankless water heaters. Why? That I don’t know.
Using a tankless water heater will essentially change your setup to being an “on-demand” hot water set up. You need to choose the right desired temperature and flow rate heater in regards to the area or appliance that you want to change to tankless.
Unfortunately, you can only get 10% on up to $5,000 dollars spent on an energy efficient home improvement, in this case meaning a tankless water heater. The energy factor of said water heater needs to be at least a factor of .82 to qualify for the tax credit. You will notice if you’re browsing for heaters that not all energy star products have that same rating.
There are some new considerations coming into play concerning energy efficient appliances in the home mostly in regards to solar-powered heat and electricity units, energy producing wind fans, and geothermal heat pumps. All of these energy efficient tax credits are only available for improvements made to your primary home.
To be quite honest, there’s the possibility that an electric tankless water heater might be the best savings for you in the long run. I’m a little unfamiliar with the various stats of the various models for gas, oil, propane, and electric tankless heaters. This will require some homework on your part.
For the credit for the tankless water heater, if you meet those requirements, then step on up! If you’re using an online tax service like TurboTax then you won’t have to worry too much about paperwork besides the obvious receipts and proof of your water heater. The information you enter in will automatically be arranged as it needs to be for legal purposes. Basically, if you file with them they’ll MAKE you take all the credits and deductions that you qualify for. Only in the way that’s the biggest benefit for you of course, they don’t actually make you do things that you don’t want to, it’s just that their biggest refund and most deductions guarantee is not a lightly uttered slogan.
Check out their site for more information on the energy tax credit rules or to see what they’re software is all about.