Federal tax credits for energy efficiency seem to abound. Does the same hold true for gas, oil and propane water heaters? Can I reap the benefits of a $1,500 tax credit as I install a more efficient water heater in my home?
There are some commercial storage tank water heaters that can qualify for the tax credit because they have a thermal efficiency of greater than 90%. These models are larger than what is typically considered a residential unit and may not have the standard safety features of residential models.
Tankless
For a partial list of tankless water heaters that qualify for the tax credit go to Air-Conditioning, Heating, Refrigeration Institute (AHRI) website.
Scroll down to "Residential Gas, Oil, Propane Water Heater" in the chart (2nd to last)
Click on the link in the last column
Select "Advanced Search"
For "Heater Type" choose "Instantaneous"
For "Tax Credit Eligible" choose "Yes" (toward the bottom of the screen)
Fill in any other information you know to narrow your search (like "energy source")
Click "Search Database"
The federal tax credit is in effect for 2009 and 2010. The appropriate heater must be installed in your principal residence between January 1, 2009 and December 31, 2010 to qualify for a tax credit of up to 30% of the cost (including installation and labor costs), with a maximum of $1,500.
If the unit was installed between Jan 1, 2009 and Feb 17, 2009, it must have an energy factor of at least .80. After Feb 17, 2009, the unit must have an energy factor of at least .82 OR a thermal efficiency of at least 90%.
How to Apply
File Tax Form 5695 with your tax return. Enter the cost of your qualified water heater on line 3a, "Energy efficiency building property" (includes water heaters, heat pumps and central air conditioners). You must have a Manufactures Certification Statement to qualify. Reminder: According to ENERGY STAR, there are NO residential storage tank water heaters that can qualify for the tax credit.
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