If you’ve considered diversifying your home heating options, now is the perfect time to invest! Certain wood-burning and pellet-burning models qualify for the Federal Biomass 30% Tax Credit. This credit encourages homeowners to use multiple heating sources rather than relying on just one. Plus, modern biomass products are significantly more efficient and feature cleaner burn designs.
Here are some key details about the tax credit. As always, consult your tax advisor to see how this credit may apply to your situation.
What Types of Appliances Qualify?
Eligible products include select wood and pellet-burning stoves, inserts, fireplaces, and furnaces that meet specific efficiency and emissions ratings.
Is Professional Installation Required?
Yes, to qualify, the appliance must be installed in your primary or secondary home by a professional, with proof of installation.
How Much Can You Claim?
You can claim up to 30% of your total investment, including the cost of the appliance, venting, and installation, as a tax credit. The maximum claim is capped at $2,000.
What Are the Efficiency Qualifications?
The appliance must have a thermal efficiency rating of 75% or higher. Ensure the product comes with a certificate confirming it meets this requirement.
What Are the EPA Emissions Qualifications?
The product must be year 2020 EPA Approved which means it has an EPA emissions rating of 2.5 grams per hour or lower if measured by the cord wood method or 2.0 grams per hour or lower if measured by the crib wood method. Again, look for the product’s certificate to confirm it meets the federal tax credit qualifications.
What Paperwork Do I Need to File?
Keep your purchase receipts and the paid-in-full invoice itemizing the product, materials, and labor. You’ll also need the certificate verifying the appliance meets the requirements. Additionally, you or your accountant must complete IRS Form 5695 for Residential Energy Credits.
What Is the Expiration Date of the Biomass Tax Credit?
The biomass tax credit expires on December 31, 2032. Be sure to plan ahead and have your product installed before this date to take advantage of this exciting opportunity to save money and also add an efficient heating source for your home!