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Here is a question about the Residential Energy Credit: Our home was hit by a tornado in 2010. It did about 40k of damage. We had several windows replaced as well as a large patio door. In all, the amount of 'Window product cost" which qualifies for the Federal Tax Credit was $8000. We had insurance and ended up writing a check to the company doing the installation of $3500. My question is, the reciept I have from the company shows the total invoice of $8000 but I only paid around 3500 of that, do I take the 3500 as the base amount for the credit or the 8,000? Looks like some tax professionals think I can deduct the entire amount, whoopie! http://community.intuit.com/posts/residential-energy-tax-credit Anyone have a dissenting opinion? Gimbal_Machine fucked around with this message at 20:35 on Mar 20, 2011 |
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Mar 20, 2011 20:18
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furushotakeru posted:Seconded. Use what you actually paid. Just wondering why you'd go with this? Is it just the 'safe play'? If I had kept the money and done the work myself and bought a new car then installed new windows at a later time using 8k of my own money, I would be able to make the deduction, right? Seems logical to me that the decision to spend the insurance proceeds on energy upgrades was my decision to make, no?
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Mar 21, 2011 18:56
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AbbiTheDog posted:If you'd kept the money and bought a new car the amount spend on the new car would be taxable income to you through the involuntary conversion rules. Then wouldn't I be able to claim the damage to my house as a loss to offset it? The value of my house was reduced by the amount of repairs required to fix it? I guess I was buying the 'money is fungible' argument from http://community.intuit.com/posts/residential-energy-tax-credit kaishek posted:Would the insurance have just paid you the remaining $4500 if you hadn't used it towards windows? Or was that amount only for the windows? I think if the money could have been used towards anything else, then you did legitimately "spend" all $8000 and should be entitled to the full deduction. I think that was confusion here...but IANATP Yes, the company doing part of the work gave me a quote for the entire 40k worth of repairs, then I subcontracted parts of it. The $40k was reimbursement to me for the amount they estimated it would take to repair the house. I guess the problem is I'm an engineer but not a lawyer. 
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Mar 21, 2011 19:57
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AbbiTheDog posted:Ninja edit - some is three years, some is two years after the close of the first tax year. Ok, so, this $800 return difference is a lot to me, so I'm going to ask a few more questions, just let me know when you are sick of me. The involuntary conversion would apply if i had not invested back into my house. The car example was poor, because thats clear. If I had used 50% of the money to do emergency fixes to the roof and the other 50% to buy new HVAC, all being property improvements, then spent my own 10k to replace the windows in the house even though they were broken by the storm and insurance gave me money for them, I would still be able to deduct the full amount, correct? The thing that makes it gray to me is that what I spend the money on, in so far that its a property improvement to improve my basis in the house, i have control over.
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Mar 21, 2011 22:19
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Right, I understand. Thanks to you both for your opinions. Helpful to see what pros think
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Mar 21, 2011 22:52
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