The IRS issued Notice 2023-59PDF today regarding the requirements for home energy audits for taxpayers that want to claim the Energy Efficient Home Improvement Credit.
The Inflation Reduction Act of 2022 created several clean energy credits. Each of these credits has requirements for the type of clean energy property or service purchased and how they are claimed. This includes a non-refundable Energy Efficient Home Improvement Credit for the purchase and installation of certain energy efficient improvements in taxpayers’ principal residences.
The credit amount is equal to 30 percent of the total amount that taxpayers pay during the year for:
qualified energy efficiency improvements installed during the year,
residential energy property expenditures, and
home energy audits.
Today’s guidance provides specific requirements to claim the Home Energy Improvement Credit and the process for conducting the home energy audit. The audit must identify the most significant and cost-effective energy efficiency improvements to the residence, including an estimate of the energy and cost savings to each improvement.
The maximum credit for home energy audits is $150. Therefore, taxpayers can claim a 30 percent credit on audits that cost up to $500. The home energy auditor must provide a written audit report to the taxpayer.
When obtaining a home energy audit make sure that it meets the credit requirements. Specifically, starting in 2024, taxpayers will need to substantiate that a qualified auditor conducted their home audit. To satisfy this requirement, the written audit should state that the auditor is certified by one of the certification programs listed on the Department of Energy certification programs for the Energy Efficient Home Improvement Credit page to conduct the home energy audit.
The Energy Efficient Home Improvement Credit is a non-refundable credit, meaning that it can only reduce the amount of tax you owe and will not create a refund.
For more information on these credits and other clean energy credits related to the Inflation Reduction Act see credits and deductions under the Inflation Reduction Act of 2022.