2015 Residential Clean Energy Credit
For 2015, the Residential Clean Energy Credit is 30% (Credit rate) and $500 (Fuel cell credit limit, per half kilowatt).
Effective 2015-01-01Source: 2015 Instructions for Form 5695 (IRS)Verified 2026-08-30
Who it applies to
Taxpayers who installed qualifying residential energy efficient property on a U.S. residence in 2015 and file IRS Form 5695 (Part I)
What changed this year, and why
For 2015, the Residential Energy Efficient Property Credit (Part I of IRS Form 5695) allows a tax credit equal to 30% of the qualified costs of installing solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property on or in connection with a home in the United States. Qualified costs include labor for onsite preparation, assembly, and original installation, as well as piping or wiring needed to interconnect the property to the home. For qualified fuel cell property, the credit is limited to $500 for each one-half kilowatt of the property's rated capacity. The credit applies to both existing homes and homes under construction. For solar, wind, and geothermal property, the home does not need to be the taxpayer's main home; fuel cell property must be installed on the taxpayer's main home. Any unused portion of the credit may be carried forward to later tax years.
Common questions
- What types of property qualify for the Residential Energy Efficient Property Credit?
- The credit covers 30% of qualified costs for solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property installed on or in connection with a U.S. residence. Labor costs for onsite preparation, assembly, and original installation, as well as piping or wiring to interconnect the property, also qualify.
- Is there a dollar limit on the fuel cell credit?
- The credit for qualified fuel cell property is limited to $500 for each one-half kilowatt of the property's rated capacity.
- Does the home have to be my main home?
- For solar electric, solar water heating, small wind, and geothermal heat pump property, the home may be any residence you used during the year. For fuel cell property, it must be your main home.
- Can the credit be carried forward if I cannot use it all in 2015?
- No. The credit may be carried forward to future years if not fully used in 2015.
What happens when the credit is bigger than your tax
If your 2015 Residential Clean Energy Credit is larger than your tax liability allows you to use in that year, the unused portion does not disappear. You may carry the unused credit forward to the following tax year (2016). The IRS requires you to file Form 5695 for 2015 even if you cannot use any of the credit that year, so the carryforward is properly recorded. This rule ensures taxpayers can eventually claim the full 30% credit against their tax liability over multiple years if necessary.
If you cannot use all of the credit because of the tax liability limit (line 14 is less than line 13), you can carry the unused portion of the credit to 2016.
2015 Instructions for Form 5695 (IRS)
Business use of the property can cut the credit
If you use qualifying property for both business and personal purposes, the 80% test determines whether you can claim the Residential Clean Energy Credit. When at least 80% of the use of an item is for nonbusiness purposes, you may use the full cost to figure your credit. However, if less than 80% of the use is for nonbusiness purposes, only the portion of costs allocable to the nonbusiness use can be used to determine the credit. This means the credit is reduced proportionally based on the percentage of personal versus business use of the property.
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.
2015 Instructions for Form 5695 (IRS)
A cost counts when installation is finished, not when you paid
For the Residential Clean Energy Credit, costs are not considered paid when you actually pay the contractor or supplier. Instead, costs are treated as being paid when the original installation of the item is completed. For costs connected with the reconstruction of your home, the costs are treated as paid when your original use of the reconstructed home begins. This timing rule determines which tax year the credit belongs to, regardless of when you made payments during the construction or installation process.
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.
2015 Instructions for Form 5695 (IRS)
Utility rebates come off the cost first
If you receive a subsidy from a public utility for the purchase or installation of qualifying energy property, and that subsidy was not included in your gross income, you must reduce your cost for the property by the amount of that subsidy before calculating your credit. This reduction applies even if a third party, such as a contractor, receives the subsidy on your behalf. The rule ensures that the 30% credit is calculated only on your actual out-of-pocket costs, not on amounts covered by tax-free utility rebates or incentives.
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 figure your credit.
2015 Instructions for Form 5695 (IRS)
Fuel cells must be at your main home; solar need not be
Qualified fuel cell property must be installed on or in connection with your main home located in the United States to be eligible for the Residential Clean Energy Credit. This is a stricter requirement than solar, wind, or geothermal property, which can be installed at a second home or vacation property. The fuel cell credit limit is $500 per half kilowatt of capacity. Your main home is generally the residence you live in most of the time, and temporary absences due to illness, education, business, military service, or vacation do not change which home qualifies as your main home.
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.
2015 Instructions for Form 5695 (IRS)
How each figure was verified
Each number below was read from a stored copy of the document named beside it, and checked to occur word for word in the quoted sentence. The digest is of that stored text.
2015 Instructions for Form 5695 (IRS)
- Credit rate
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.
- Fuel cell credit limit, per half kilowatt
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.