Whole House Generator Tax Credit

A whole house generator is a great way to ensure you have power in the event of an outage. It can also boost your home’s value, which will help you sell it at a higher price.

The good news is that you can actually claim a tax credit for installing a whole house generator. However, there are some limitations.

Medical Expenses

If you or someone else in your household has a documented medical condition that requires constant power, you may be able to claim the cost of a whole house generator as a tax credit. This is especially true if the generator is used to keep oxygen tanks or insulin chilled round the clock during power outages.

The Internal Revenue Service (IRS) allows you to deduct unreimbursed payments for preventative care, treatment, surgeries, dental and vision care, visits to psychologists and psychiatrists, prescription medications, appliances such as glasses, contacts, false teeth and hearing aids, and expenses that you pay to travel for qualified medical care.

The IRS also says you can deduct certain home improvements if their main purpose is to provide medical care for yourself, your spouse or a dependent. But these improvements must not increase the value of your home.

Capital Gains Tax Credit

If you own a home and want to install a whole house generator, you might qualify for a capital gains tax credit. A generator can increase the value of your home and help you make a bigger profit when you sell it, which can reduce your capital gains taxes.

You can exclude up to $250,000 of the gain on your sale if you file as single, head of household, or married filing separately and $500,000 if you are married filing jointly. The amount you can exclude is based on how long you have owned the property before selling it.

In addition, if you have made a gift of ecologically sensitive land to certain qualified donees (other than a private foundation), the inclusion rate is zero for capital gains. To report your capital gains on these gifts, use Form T1170, Capital Gains on Gifts of Certain Capital Property.

FEMA Reimbursement

Whole house generators are lifesavers for many people who suffer from prolonged power outages after natural disasters. Depending on your circumstances, the whole house generator tax credit may cover some or all of the cost of a standby generator.

Those seeking FEMA reimbursement will need to supply a rental or purchase receipt as well as a statement from a medical services provider reflecting that the generator is necessary for your health care needs.

The reimbursement is not tax-free but is not counted as income for social security, does not require repayment, and is exempt from garnishment, seizure, encumbrance, levy, execution, pledge, attachment, release or waiver.

FEMA reimburses the cost of generators incurred during the time a state governor declares a disaster and until power is restored. However, it can take some time to receive the funds.

Tax Credits

If you are in the market for a whole house generator, there are several tax credits that you may qualify for. You will need to check with your accountant and tax preparer to determine which state programs or incentives are available in your area.

One of the more common tax credits is the energy property credit. It is designed to reward homeowners for installing a variety of green home improvements.

For example, you can deduct up to $500 if you install an electric car recharging station or an efficient furnace or air conditioner.

Another credit that you might qualify for is the energy generator tax credit, which incentivizes people to purchase a renewable energy generator and use it to produce electricity.

You can also claim the residential solar energy property credit if you have a qualified solar roof or other solar products installed on your home. Currently, the credit is worth 26% of the cost of the equipment.