Tax Credit Form
Form 5695 (2012)
Page 3
General Instructions
Section references are to the Internal Revenue Code.
Future Developments
For the the latest information about developments related to
Form 5695 and its instructions, such as legislation enacted after
they were published, go to www.irs.gov/form5695.
What's New
The nonbusiness energy property credit has been extended through
2013. You figure your nonbusiness energy property credit on Part II
of this form.
Purpose of Form
Use Form 5695 to figure and take your residential energy credits.
The residential energy credits are:
• The residential energy efficient property credit, and
• The nonbusiness energy property credit.
Also use Form 5695 to take any residential energy efficient
property credit carryforward from 2011 or to carry the unused
portion of the credit to 2013.
Who Can Take the Credits
You may be able to take the credits if you made energy saving
improvements to your home located in the United States in 2012.
Home. A home is where you lived in 2012 and can include a house,
houseboat, mobile home, cooperative apartment, condominium,
and a manufactured home that conforms to Federal Manufactured
Home Construction and Safety Standards.
You must reduce the basis of your home by the amount of any
credit allowed.
Main home. Your main home is generally the home where you
live most of the time. A temporary absence due to special
circumstances, such as illness, education, business, military
service, or vacation, will not change your main home.
Costs. For purposes of both credits, costs are treated as being paid
when the original installation of the item is completed, or in the case
of costs connected with the reconstruction of your home, when
your original use of the reconstructed home begins. For purposes of
the residential energy efficient property credit only, costs connected
with the construction of a home are treated as being paid when
your original use of the constructed home begins. If less than 80%
of the use of an item is for nonbusiness purposes, only that portion
of the costs that is allocable to the nonbusiness use can be used to
determine either credit.
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CAUTION
Only the residential energy efficient property credit (Part
I) is available for both existing homes and homes being
constructed. The nonbusiness energy property credit
(Part II) is only available for existing homes.
Association or cooperative costs. If you are a member of a
condominium management association for a condominium you own
or a tenant-stockholder in a cooperative housing corporation, you
are treated as having paid your proportionate share of any costs of
such association or corporation.
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CAUTION
If you received a subsidy from a public utility for the
purchase or installation of an energy conservation
product and that subsidy was not included in your gross
income, you must reduce your cost for the
product by the amount of that subsidy before you compute your
credit. This rule also applies if a third party (such as a contractor)
receives the subsidy on your behalf.
Residential Energy Efficient Property Credit
(Part I)
If you made energy saving improvements to more than one home
that you used as a residence during 2012, enter the total of those
costs on the applicable line(s) of one Form 5695. For qualified fuel
cell property, see Lines 7a and 7b, later.
You may be able to take a credit of 30% of your costs of qualified
solar electric property, solar water heating property, small wind
energy property, geothermal heat pump property, and fuel cell
property. Include any labor costs properly allocable to the onsite
preparation, assembly, or original installation of the residential
energy efficient property and for piping or wiring to interconnect
such property to the home. The credit amount for costs paid for
qualified fuel cell property is limited to $500 for each one-half
kilowatt of capacity of the property.
Qualified solar electric property costs. Qualified solar electric
property costs are costs for property that uses solar energy to
generate electricity for use in your home located in the United
States. No costs relating to a solar panel or other property installed
as a roof (or portion thereof) will fail to qualify solely because the
property constitutes a structural component of the structure on
which it is installed. The home does not have to be your main home.
Qualified solar water heating property costs. Qualified solar
water heating property costs are costs for property to heat water for
use in your home located in the United States if at least half of the
energy used by the solar water heating property for such purpose is
derived from the sun. No costs relating to a solar panel or other
property installed as a roof (or portion thereof) will fail to qualify
solely because the property constitutes a structural component of
the structure on which it is installed. To qualify for the credit, the
property must be certified for performance by the nonprofit Solar
Rating Certification Corporation or a comparable entity endorsed by
the government of the state in which the property is installed. The
home does not have to be your main home.
Qualified small wind energy property costs. Qualified small wind
energy property costs are costs for property that uses a wind
turbine to generate electricity for use in connection with your home
located in the United States. The home does not have to be your
main home.
Qualified geothermal heat pump property costs. Qualified
geothermal heat pump property costs are costs for qualified
geothermal heat pump property installed on or in connection with
your home located in the United States. Qualified geothermal heat
pump property is any equipment that uses the ground or ground
water as a thermal energy source to heat your home or as a thermal
energy sink to cool your home. To qualify for the credit, the
geothermal heat pump property must meet the requirements of the
Energy Star program that are in effect at the time of purchase. The
home does not have to be your main home.
Qualified fuel cell property costs. Qualified fuel cell property costs
are costs for qualified fuel cell property installed on or in connection
with your main home located in the United States. Qualified fuel cell
property is an integrated system comprised of a fuel cell stack
assembly and associated balance of plant components that
converts a fuel into electricity using electrochemical means. To
qualify for the credit, the fuel cell property must have a nameplate
capacity of at least one-half kilowatt of electricity using an
electrochemical process and an electricity-only generation
efficiency greater than 30%.
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CAUTION
Costs allocable to a swimming pool, hot tub, or any
other energy storage medium which has a function
other than the function of such storage do not qualify
for the residential energy efficiency credit.
Joint occupancy. If you occupied your home jointly with someone
other than your spouse, each occupant must complete his or her
own Form 5695. To figure the credit, the maximum qualifying costs
that can be taken into account by all occupants for qualified fuel cell
property costs is $1,667 for each one-half kilowatt of capacity of the
property. The amount allocable to you for qualified fuel cell property
costs is the lesser of: