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Level 5
April 4, 2022

Geothermal - 26% Energy Credit - Vacation Rental with Personal Use

  • April 4, 2022
  • 1 reply
  • 10 views

Client put in a geothermal heat pump in a vacation rental with personal use (52 rental days, 38 personal use days).  Can he claim all or a portion of the 25D Residential Energy Efficient Property 26% credit?

 

Q&A #6 in Notice 2013-70 states that it cannot be claimed for an investment property that is not also used as a residence by the taxpayer.   This implies that my client can claim the credit.  Does he claim a portion of the credit?  The entire credit?  Get to depreciate the difference between the cost and the credit?

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1 reply

Level 15
April 4, 2022

It is prorated, the personal portion qualifies for the §25D credit on Form 5695.

For the rental portion, check out §48 and Form 3468.

TaxGirl3Author
Level 5
April 4, 2022

Thank you very much!  I really appreciate that you took the time... to save me time 🙂