Although the biomass tax credit for heating appliances was not extended in 2015, an unexpected event occurred on December 16, 2015, largely due to efforts put forth by the Hearth, Patio, and Barbecue Association. The year-end tax deal that was negotiated between the House and Senate leadership was unveiled. Included in this section is the $300 credit for residential biomass stoves. The bill reauthorizes the tax credit retroactively to January 1, 2015 and extended through December 31, 2016.
The credit applies to purchases made in 2015 and 2016. Consumers who made residential biomass heating purchases need to retain for their records a manufacturer’s certificate that demonstrates the unit qualifies for Sec. 25C and a receipt (proof of purchase).
- The credit is for biomass heating appliances: pellet stoves, pellet inserts, wood-burning heating stoves, and wood-burning fireplace inserts.
- The appliance must be installed in an existing primary residence, not a new house or rental property.
- The stove or insert must have a minimum efficiency rating of 75% as certified by the manufacturer.
- The appliance must be an EPA approved biomass stove.
Homeowners should keep the manufacturer’s certificate and invoice from the installer to give to their accountant and keep for their records, but do not need to file these items with their tax forms. A copy of the certificate can usually be obtained from the manufacturer’s website.
This credit reduces the amount of tax you owe for 2015 or 2016 dollar for dollar. The credit is a reduction of total income tax at the bottom of your return, up to $300. Consult your tax accountant for details.This credit is included in standard tax accounting software as well.
Homeowners should check the credentials of the installer to make sure they are qualified, properly licensed, and insured before having an installation completed. Many cities in the Kansas City area require that a person or company with a Master Mechanical license do the installation, and do not allow homeowners or an unlicensed contractor to do the installation. Ask the installer for a copy of this license if your city requires it. Often insurance companies will require that installation is done by a certified and licensed installer. Be sure to notify your insurance company of the installation or your home may not be covered in case of fire.
The only training available in the U.S. for installers is directly from the manufacturer or through two national organizations: The National Fireplace Institute and the Chimney Safety Institute of America. To find a Certified Woodburning or Pellet Specialist, visit the National Fireplace Institute website. To find a Certified Chimney Sweep, visit the Chimney Safety Institute of America website or the Midwest Chimney Safety Council at www.mcsc-net.org.
For existing masonry chimneys or fireplaces, an inspection is required by International Residential Code prior to changing anything about the system to make sure it is suitable for use with the new equipment. This should be done before ordering the new appliance, since changes may need to be made prior to installation.
Tips from the Midwest Chimney Safety Council:
- The MCSC recommends that wood burning or pellet inserts be installed only in masonry fireplaces, never in a prefabricated fireplace.
- Always have an inspection completed by a CSIA Certified Chimney Sweep prior to purchasing a new appliance.
- Always have a stainless steel flue liner installed with a wood-burning insert.
- Only have the installation done by a certified and licensed professional.
- Visit the Department of Energy website at www.energy.gov for more information on the Tax Credit