Can we claim these huge expenses? Sold 1 & Purchased another home in 2019. Finished previously unfinished space in new home (Bath, bed, common). Also, added a fence.

If the improvements and purchases are for personal use only (e.g., not a rental property you are using to generate income), you will likely not be able to receive a tax benefit from the expense. The exception to this involves energy-efficient improvements. Read on to learn if you are eligible for these credits:

Nonbusiness Energy Property Credit

The Nonbusiness Energy Property Credit is for existing main homes. It applies to building envelope components such as doors, windows, insulation, and heat resistant roofs, along with heating, air conditioning, stoves, and water heaters.

Credit amount

The total combined credit limit is $500 for all years after 2005. 

Subsidized energy financing

Expenditures made from financing provided under a federal, state, or local program, the principal purpose of which is to provide subsidized financing for projects designed to conserve or produce energy, cannot be used to calculate the credit.

Carryovers 

The Nonbusiness Energy Property Credit is nonrefundable and unused amounts are not carried forward.

Residential Energy Efficient Property Credit

The Residential Energy Efficient Property Credit applies to solar and wind power property and geothermal heat pumps. The credit is available for both existing homes and homes being newly constructed.

Credit rate 

In 2019, the credit rate is 30% of the cost of eligible property. The cost of labor is included when calculating the credit. For the Residential Energy Efficient Property Credit, (solar and wind power, geothermal heat pumps), there is no annual limit on the amount of credit allowed.

In future years, the credit rates are:

• 2020: 26%

• 2021: 22% 

Qualifying solar panels 

Solar roofing tiles and shingles that serve both as traditional roofing and solar electric collectors qualify for the credit. Structural components such as a roof’s decking or rafters that serve only a roofing or structural function do not qualify for the credit. 

Carryovers 

The Residential Energy Efficient Property Credit is not refundable, but unused amounts may be carried forward to the following year.

New construction 

The expenditure is considered made when the property is placed in service.

Swimming pools and hot tubs 

Costs allocable to a swimming pool, hot tub, or any other energy storage medium which has a function other than the function of such storage do not qualify for the Residential Energy Efficient Property Credit.

More information can be found here: Form 5695 Residential Energy Credits