Colorado State Heat Pump Tax Credit Filing Instructions

A new Colorado State tax credit for heat pumps and heat pump water heaters went into effect on January 1, 2023. This guide is only for heat pumps installed in the state of Colorado in 2023.

  • The tax credit is an income tax reduction based on 10% of the price of the equipment, not including installation charges. 
  • The 10% tax credit also extends to electrical panel upgrades (if needed for the heat pump or heat pump water heater installation) and energy storage systems.
  • Inclusive Definition: “Building owners” encompass lessees with lessor-approved installations.

How to Claim / File for the Income Tax Credit:

Fill out Form DR 1322. This must accompany the building owner’s Colorado income tax return. Instructions below.
Note: If you are an Elephant Energy customer, download and use this Form DR 1322 as it is signed by us.

Disclaimer: While we provide guidance, it’s crucial to seek advice from a tax professional regarding individual tax situations. Our presentation doesn’t assume liability for your specific tax circumstances.

  1. PART 1 – Eligibility Certification
    • Building Owner Information: Fill in your name, Social Security number, and address. Include your spouse’s details only if filing jointly. If the building owner is a business, provide its name and Federal Employer Identification number.
      Screenshot of tax form for building owner information
    • Contractor: 
      1. Business Name: Elephant Energy, Inc.
      2. FEIN: 61-1992874
      3. Mailing Address: 1390 Yellow Pine Avenue
      4. City: Boulder
      5. State & Zip Code: CO 80304
        Contractor information on a tax form
    • Line 1 Installation Address and Date: List the street address of the building where the heat pump or heat pump water heater was installed.
      Installation address and date
    • Line 2 Purchase Type, Building Type, and Installation Standard 
      1. For purchase type, select the relevant purchase made from one of the highlighted products that Elephant Energy supplies below (with star).
      2. For building type, choose “Residential”.
      3. For Installation Standard, check “Licensed Contractor with Specialized Technicians”
    • Line 3 Purchase Information: provide the purchase date, serial numbers of the main components of the heat pump or water heater, along with their make and model details. This information is in your invoice from Elephant Energy.
    • Line 4 Certification of System Requirements and Installation Standards: Elephant Energy can confirm that its installations meet all 6 criteria.
      Purchase information tax form for energy creditPurchase Information
    • Line 5 Amount of Income Tax Credit
      1. On Line 5a, input the equipment-only cost. Please refer to your invoice for this breakdown.
      2. On Line 5b, calculate your heat pump system or water heater credit by multiplying the amount from Line 5a by 10% (0.10). This resulting figure represents your eligible credit. If you’re not assigning the credit, transfer this amount to the appropriate credit schedule (DR 0104CR, DR 0106CR, or DR 0112CR).
        Amount of Income Tax Credit
  1. PART 2 – Contractor Certification Sales Tax Exemption – Elephant Energy installations have already taken the sales tax exemption so there is nothing for you to do here.
  2. PART 3 – Election Statement for Assignment of Income Tax Credit – Elephant Energy systems are not eligible for assignment back to Elephant Energy.

And once again, thank you for being a part of the Elephant Energy Herd!! We couldn’t be where we are without wonderful customers like yourselves. And in return, we’re here for you – before, during, and after your Climate-Friendly Home Upgrade.

Federal Heat Pump Tax Credit – Understanding the 2023 Heat Pump Tax Credit

The 25C tax credit, under the Inflation Reduction Act, offers substantial benefits for individuals investing in heat pump systems, heat pump water heaters, electrical panel upgrades, select weatherization measures, and energy audits – including you, our customers!

Notably:

  • Value: Enjoy a 30% tax credit on the total purchase of any combination of air source heat pumps and heat pump water heaters, capped at $2,000, other upgrades capped at $1,200 and electrical panel upgrades installed in conjunction with a heat pump or  HPWH will be eligible for a tax credit of up to $600.
  • Installation Deadline: To claim the tax credit in a given tax year, you must have installed your heat pump during that year. So to claim the credit for the 2023 tax year, ensure your heat pump HVAC system or heat pump water heater installation was completed before December 31, 2023.
    • The credit limit is applicable on an annual basis, resetting each year, allowing for its reuse annually.
  • Property Requirements: Equipment must be installed in an existing home and your principal residence (the place you occupy most of the time). New construction and rentals do not apply. The principal residence must be in the United States and may be a house, houseboat, mobile home, cooperative apartment, condominium, or a manufactured home to qualify.
  • Example: For instance, if your federal tax liability amounts to $3,000 and you qualify for the maximum $2,000 credit, your owed taxes decrease to $1,000 after applying the credit.
    25c Heat Pump Tax Credit

Energy Efficiency

Energy Efficiency investments qualify for the Energy Efficiency tax credit.

  • This credit is 30% of the project cost up to a maximum of credit value of $1,200
  • Upgrades that qualify:
    • Attic Insulation
    • Basement / crawlspace insulation

Home Energy Audits

A home energy audit for your main home may qualify for a tax credit of up to $150. In order to qualify, the home energy audit must:

  • Include a written report and inspection that identifies the most significant and cost-effective energy efficiency improvements with respect to the home, including an estimate of the energy and cost savings with respect to such improvement.
  • Be conducted and prepared by a home energy auditor

Disclaimer: While we provide guidance, it’s crucial to seek advice from a tax professional regarding individual tax situations. Our presentation doesn’t assume liability for your specific tax circumstances.

How to Claim / File for the Heat Pump Tax Credit:

  • IRS Form 5695: Complete this form (specifically Part Two: Energy Efficient Home Improvement Credit) to outline your eligibility for the heat pump tax credit.
  • Fill out your Name, Social Security Number, and your main home’s address. 
    1. PART I: ​​Residential Clean Energy Credit
      Form 5695 Residential Energy Tax Credits
    2. PART II: Energy Efficient Home Improvement Credit
      1. Continue filling out lines 17 through 32.
      2. In Section A Line 18, enter the total invoice amount for insulation and air sealing. 
      3. In Section B Line 25ab, enter the total invoice amount for electrical panel upgrades. 
      4. In Section B Line 29abc, enter the total invoice amount for heat pumps and/or heat pump water heaters.
        Section A - Qualified Energy Efficiency Improvements
        Section B - Residential Energy Property Expenditures
    1. Integration with Form 1040: Add the relevant tax credit details to your standard Form 1040 during the tax filing process.
    2. Submission: Ensure Form 5695 is included when filing your taxes to claim the credit accurately.

    MORE DETAILED INSTRUCTIONS ON FILLING OUT THE FORM HERE.
    MORE INFO HERE.

    And once again, thank you for being a part of the Elephant Energy Herd!! We couldn’t be where we are without wonderful customers like yourselves. And in return, we’re here for you – before, during, and after your Climate-Friendly Home Upgrade.

    Elephant Energy’s Ultimate Guide to Mass Save Rebates

    At Elephant Energy, our goal is to help you create a comfortable and sustainable home. That’s why we’re thrilled to share our ultimate guide to Mass Save rebates, designed to make your journey to energy efficiency easier and more affordable.

    Continue reading “Elephant Energy’s Ultimate Guide to Mass Save Rebates”

    Home Upgrades For $0 Down With RENU

    zero money down, $0 down, home upgrades

    Introducing RENU

    We are excited to introduce our new trusted partner, RENU! With RENU, we now offer low-cost financing for all of our projects. Starting at 6.9% and zero-money down, RENU makes it more affordable than ever to invest in electric home upgrades for your home!

    What is RENU?

    The Colorado Residential Energy Upgrade (“RENU”) Loan is a statewide residential loan program sponsored by the Colorado Clean Energy Fund. It makes home upgrades easy and affordable with low-cost, long-term financing for energy efficiency and renewable energy improvements.

    RENU helps homeowners save money on their energy bills by improving energy efficiency and reducing energy consumption. RENU-eligible home upgrades also reduce greenhouse gas emissions.

    What Home Upgrades Qualify?

    Qualifying home upgrades include: heat pumps, heat pump water heaters, induction stoves, electric vehicle (EV) charging stations, efficiency & weatherization upgrades, and ventilation & indoor air quality controls.

    Who Qualifies?

    To qualify for RENU, homeowners must own a single-family or multi-family home of up to four units in Colorado and meet certain underwriting requirements. The loan amount, terms, and interest rate depend on the borrower’s specific energy upgrades and creditworthiness.

    How Can Homeowners Apply?

    To apply for RENU, homeowners must complete a credit application that is initiated by Elephant Energy and ultimately provide relevant documentation to the selected RENU lender, such as proof of income, proof of ownership, and a detailed list of their selected home upgrades. A loan officer from the RENU credit union will review the application and determine whether the borrower is eligible for the loan.

    Now What?

    Ready to increase your home’s comfort and energy efficiency with modern electric home upgrades? Get Your Electrification Roadmap® and a Free Estimate today! 

    Our friendly team at Elephant Energy will be with you every step of the way to streamline financing with RENU as well as rebate optimization through the Inflation Reduction Act (IRA) incentives (we have a guide on that, here!) We will help you achieve the best home upgrades with the lowest possible price tag.

    To learn more about our team and mission, click here.
    To learn more about RENU Financing, visit their website here.
    To see Elevations Credit Union’s rate sheet, click here.
    To see Westerra Credit Union’s rate sheet, click here.

    Elephant’s Guide to Making the Most of the Inflation Reduction Act (IRA) Incentives

     

    Wondering how the Inflation Reduction Act will impact you financially? Want to gain a better understanding of home energy rebates and incentives will be available to you?

    Read on for our guide on the Inflation Reduction Act (IRA) tax credits and direct-pay rebates!

    Continue reading “Elephant’s Guide to Making the Most of the Inflation Reduction Act (IRA) Incentives”