Tax returns are due on Monday, April 18 thanks to Washington D.C.’s observation of Emancipation Day. While many of us appreciate the extra few days, the fact is that they will still be due on Monday! You probably are still thinking about the taxes you are filing this year, it is a great time to start thinking about your taxes for next year, and for the coming years.
Certain Energy Star certified electric water heaters and gas water heaters qualify for a tax credit of$300! If you purchase an electric water heater with an energy factor of greater than or equal to 2.0, you will qualify for purchases made in 2016. For gas, oil or propane water heaters the energy factor must be equal to or greater than 0.82 or a thermal efficiency of at least 90%.
For water heaters, the energy factor is based on three factors: 1) the recovery efficiency, or how efficiently the heat from the energy source is transferred to the water; 2) stand-by losses, or the percentage of heat lost per hour from the stored water compared to the content of the water: and 3) cycling losses.
The tax credit does not apply to rental properties or newly constructed properties. The water heater must be installed in your primary residence before December 31, 2016, so this is the last year to claim this deduction. Unfortunately, there is no tax credit for electric storage tanks or electric tankless water heaters and the can not earn the energy star. You earn these credits when you file your tax return next year by filing form 5695.
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