Frequently asked questions about energy efficient home improvements and residential clean energy property credits - Timing of credits

Updated FAQs were released to the public in Fact Sheet 2024-15 PDF, April 17, 2024.

Q1. May a taxpayer claim the credits in the year of purchase if installation of the qualifying property occurs in a later year? (added December 22, 2022)

A1. No. A taxpayer may not claim the credits until the year the property is installed.

Q2. Are there any requirements for how long the property must remain in use to qualify for the credits? (added December 22, 2022)

A2. In the case of building envelope components for which an Energy Efficient Home Improvement Credit is available (exterior doors, windows, skylights, insulation and air sealing materials or systems), the component must reasonably be expected to remain in use for at least 5 years. This requirement does not apply to other property discussed in these FAQs.

Q3. Is there a lifetime limit on the credits? (added December 22, 2022)

A3. No. There is no lifetime limit for either credit; the limits for the credits are determined on a yearly basis. For example, beginning in 2023, a taxpayer can claim the maximum Energy Efficient Home Improvement Credit allowed every year that eligible improvements are made.

Q4. May a taxpayer carry forward unused credits to another tax year? (added December 22, 2022)

A4. The rules vary by credit.

• Under the Energy Efficient Home Improvement Credit: a taxpayer may not carry the credit forward. Thus, if a taxpayer does not have sufficient tax liability to claim all or a portion of the credit in the year in which the related property for which the qualifying expenditure is placed in service, the unused amount of the credit may never be claimed.
   
• Under the Residential Clean Energy Property Credit: a taxpayer may carry forward the unused amount of the credit to reduce tax liability in future tax years.