2012-2013 Tax Credit Extension FAQ's
As part of the “fiscal cliff” package that passed Congress on January 1, 2013, the expired 2011 tax credit for energy efficient biomass-burning appliances was reinstated for 2013. The package provides a 10 percent tax credit, up to $300 in value, on the purchase of a qualifying wood or pellet-burning product. The tax credit is subject to a $500 “lifetime limit” and applies retroactively to appliances purchased between January 1, 2012 and December 31, 2012.
- Q: How does the new 2013 extension of the Recovery Act affect the purchase of wood stoves?
A: If you purchased and installed a new, qualifying biomass (wood or pellet) stove between January 1, 2012 and December 31, 2012, you can take a credit against your 2012 taxes totaling 10% of the purchase price, up to $3000 (maximum credit $300). The credit can also be taken on your 2013 tax return, for qualifying biomass products purchased between January 1, 2013 and December 31, 2013.
- Q: What toves Qualify?
A: The stove must be new, must burn biomass fuel, must achieve a thermal efficiency rating of 75% or greater, and must be purchased and put into service by Decemer 31, 2013.
- Q: Can I purchase more than one stove and get a 10% credit for each of them on this program?
A: Yes,but only if all are installed in your principal residence, up to the credit ceiling of $300.
- Q: So, I could buy new stoves for the new house I'm building, my summer cabin and my rental house for a total of up to $3000, and get a 10% credit (up to $300) for the total?
A: No, the credit only applies to stoves installed in existing principal residences. Your new house, summer cabin and rental don't qualify.
- Q: Does this apply only to wood stoves?
A: The 10% tax credit also applies to other biomass appliances, such as pellet and corn stoves, as long as they achieve at least 75% thermal efficiency. For the purposes of this tax credit, the term 'renewable biomass' means any of the following:
(A) Materials, pre-commercial thinnings, or removed invasive species from National Forest System land and public lands, including those that are byproducts of preventive treatments (such as trees, wood, brush, thinnings, chips, and slash), that are removed as part of a federally recognized timber sale, or that are removed to reduce hazardous fuels, to reduce or contain disease or insect infestation, or to restore ecosystem health, and that are harvested in environmentally sustainable quantities, as determined by the appropriate federal land manager; and harvested in accordance with federal and state law, and applicable land management plans.
(B) Any organic matter that is available on a renewable or recurring basis from non-federal land or land belonging to an Indian or Indian Tribe that is held in trust by the United States, including renewable plant material like feed grains; other agricultural commodities; other plants and trees; and algae; and waste material, including crop residue; other vegetative waste material (including wood waste and wood residues); animal waste and byproducts (including fats, oils, greases, and manure); construction waste; and food waste and yard waste.
(C) Residues and byproducts from wood, pulp, or paper products facilities.
- Q: If I spend $4,000 on my new stove? 10% would be $400. Would I get the $400?
A: No, the tax credit ceiling on the total of all biomass appliances is $300.
- Q:Will this be some sort of deduction applied to my total wages, like a medical deduction?
A: This is much better: the credit comes straight off the bottom line on your return.
- Q: I purchased a $2500 wood stove for my home in 2011, and received a tax credit for $250.00. We've moved, and are now considering a $3000 wood stove for this house. Can I claim the $300 tax credit on my 2013 return?
A: There is a lifetime limit of $500 on the tax credits. You've already taken $250, so you would only have $250 still available.
- Q:What if I buy a wood or pellet stove second-hand? Can I take the credit?
A: No. The law specifies that the credit can only be applied to the purchase and installation of new stoves.