2011 Tankless Water Heater Tax Credit Guide

As with all things government the rules change quickly and not always for our best. On Dec. 17,2010 a new set of rules were put into affect regarding energy tax credits. We at Tankless Guide have tried to pull the highlights out of these changes to make it easier for our readers to find out what it means to them. The good news is the new version of the Tax Relief/ Unemployment Insurance/ Reauthorization, and Job Creation Act of 2010 does carry into 2011. However there are now new limits for lifetime amounts as well as new requirements on different products. Below are some of the changes and how they pertain to tankless water heaters

New Tax Highlights of Interest:

  • The new limit is $500 combined for fiscal  years 2006 to 2011. If you used part of the credit during any of those years that will be added into your total maximim. This includes deductiosn you tookfor other items such as furnaces,windows,doors.
  • The tankless water heater must be installed between Jan 1,2011 and Dec 31,2011.
  • The nankless water heater must offer a
  • This deduction is only good in your primary residence. No cabins or rentals. Also only good if your address is in the USA.
  • This tax credit only applies to existing homes it does not apply to new construction.

How to Apply For your Tax Credit

  • Choose a tankless water heater that not only fits your needs but also meets the Federal EF requirment.
  • You will need a copy of the performace certificate for your heater.
  • Always save your copy of the bills for your unit. You will need this for the IRS Form 5695 application form. The link is to a PDF that is fillable on site. If you can’t open PDF files go to IRS Forms and Publications
  • The government usually uses the install date as the correct date of service not the date of purchaase.

Tax Credit Check List

  • Make sure your tankless water heater complies with the federal guidelines to qualify for the credit. Remember not all Energy Star heaters comply.
  • Have the unit installed before Dec. 31,2011.
  • Keep your receipts for your tax preparer



Even with some of the reduction in benifit this tax credit is huge and worth the effort. Do your homework before you buy. After you have filled out your Federal form 5695 also check with your state and local government web sites for crdits and rebates offered in your area. A great place to start to seach your state is DSIRE.

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