Residential Energy Efficient Property Credit Form 5695 OMB No. 1545-0074

Department of the Treasury

Internal Revenue Service

For Paperwork Reduction Act Notice, see instructions. Cat. No. 13540P Form 5695 (2008)

© See instructions.

Attachment

Sequence No. 158 © Attach to Form 1040 or Form 1040NR.

Name(s) shown on return Your social security number

2008

Before you begin: Figure the amount of any District of Columbia first-time homebuyer credit you are claiming.

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1 1

3

8

Qualified solar electric property costs

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11

12

22

25

27

26 26

12

1040 filers: Enter the total, if any, of your credits from Form

1040, lines 47 through 51; line 12 of the Line 11 worksheet in

Pub. 972 (see instructions); Form 8396, line 11; Form 8839, line

18; and Form 8859, line 11.

23

2 Multiply line 1 by 30% (.30)

Enter the smaller of line 2 or line 3

Qualified solar water heating property costs

Multiply line 5 by 30% (.30)

4

Maximum credit amount

Enter the smaller of line 6 or line 7

Qualified fuel cell property costs

Multiply line 9 by 30% (.30)

Kilowatt capacity of property on line 9 above © X $1,000

Enter the smaller of line 10 or line 11

22

3 Maximum credit amount

5

6

7

8

9

10

5

7

6

9

11

10

Credit carryforward from 2007. Enter the amount, if any, from your 2007 Form 5695, line 34

23 Add lines 4, 8, 12, 17, 21, and 22

25

1040NR filers: Enter the amount, if any, from Form 1040NR,

lines 44 through 46; line 12 of the Line 11 worksheet in Pub. 972

(see instructions); Form 8396, line 11; Form 8839, line 18; and

Form 8859, line 11. %

Subtract line 25 from line 24. If zero or less, enter -0- here and on line 27

$4,000

$2,000

24 Enter the amount from Form 1040, line 46, or Form 1040NR, line 43 24

27 Residential energy efficient property credit. Enter the smaller of line 23 or line 26 here and on 

Form 1040, line 53, or Form 1040NR, line 48, and check box c on that line

28 Credit carryforward to 2009. If line 27 is less than line 23, subtract line 

27 from line 23 28

.

Note. Skip lines 1 through 21 if you only have a credit carryforward from 2007.

13 Qualified small wind energy property costs 13

14 Multiply line 13 by 30% (.30) 14

16 Maximum credit amount 16

18 Qualified geothermal heat pump property costs 18

19 Multiply line 18 by 30% (.30) 19

20 Maximum credit amount 20

15 Kilowatt capacity of property on line 13 above © . X $1,000 15

17 Enter the smallest of lines 14, 15, or 16 17

21 Enter the smaller of line 19 or line 20 21

$2,000

$2,000
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Form 5695 (2008) Page 3

General Instructions

Section references are to the Internal Revenue Code.

Purpose of Form

Use Form 5695 to figure and take your residential

energy efficient property credit, including any credit

carryforward from 2007.

Who Can Take the Credit

You may be able to take the credit if you made energy

saving improvements to your home located in the

United States in 2008. For credit purposes, costs are

treated as being paid when the original installation of

the item is completed, or in the case of costs

connected with the construction or reconstruction of

your home, when your original use of the constructed

or reconstructed home begins. If less than 80% of the

use of an item is for nonbusiness purposes, only that

portion of the costs that are allocable to the

nonbusiness use can be used to determine the credit.

Home. A home is where you lived in 2008 and can

include a house, houseboat, mobile home, cooperative

apartment, condominium, and a manufactured home

that conforms to Federal Manufactured Home

Construction and Safety Standards.

You must reduce the basis of your home by the

amount of any credits allowed.

Main home. Your main home is generally the home

where you live most of the time. A temporary absence

due to special circumstances, such as illness,

education, business, military service, or vacation, will

not change your main home.

Special rules. If you are a member of a condominium

management association for a condominium you own

or a tenant-stockholder in a cooperative housing

corporation, you are treated as having paid your

proportionate share of any costs of such association or

corporation.

federal, state, or local program, the principal purpose

of which is to provide subsidized financing for projects

designed to conserve or produce energy.

What’s New for 2008

Nonbusiness energy property credit expired. You

cannot take the nonbusiness energy property credit for

property placed in service in 2008.

● $500 for each one-half kilowatt of capacity of

qualified fuel cell property for which qualified fuel cell

property costs are paid.

Qualified solar electric property costs. Qualified

solar electric property costs are costs for property that

uses solar energy to generate electricity for use in your

home located in the United States. This includes costs

relating to a solar panel or other property installed as a

roof or a portion of a roof. The home does not have to

be your main home.

Residential Energy Efficient Property Credit

You may be able to take a credit of 30% of your costs

of qualified solar electric property, solar water heating

property, fuel cell property, small wind energy property,

and geothermal heat pump property. This includes

labor costs properly allocable to the onsite preparation,

assembly, or original installation of the property and for

piping or wiring to interconnect such property to the

home. This credit is limited to:

● $2,000 for qualified solar electric property costs,

● $2,000 for qualified solar water heating property

costs,

Qualified solar water heating property costs.

Qualified solar water heating property costs are costs

for property to heat water for use in your home located

in the United States if at least half of the energy used

by the solar water heating property for such purpose is

derived from the sun. This includes costs relating to a

solar panel or other property installed as a roof or a

portion of a roof. To qualify for the credit, the property

must be certified for performance by the nonprofit

Solar Rating Certification Corporation or a comparable

entity endorsed by the government of the state in

which the property is installed. The home does not

have to be your main home.

Credit expanded. You can now include costs for

qualified small wind energy property and qualified

geothermal heat pump property in figuring the

residential energy efficient property credit.

What’s New for 2009

Nonbusiness energy property credit available. The

nonbusiness energy property credit will be available for

property placed in service in 2009. The credit is

available for items such as high-efficiency heating and

cooling systems, water heaters, windows, doors, and

insulation. The amount of the credit will be limited by

the amount of any nonbusiness energy property credit

you took in 2006 or 2007. ● $500 for each one-half kilowatt of capacity of

qualified small wind energy property for which qualified

small wind energy property costs are paid (not to

exceed $4,000), and

● $2,000 for qualified geothermal heat pump property

costs.

Qualified fuel cell property costs. 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. Qualified fuel cell property

is an integrated system comprised of a fuel cell stack

assembly and associated balance of plant components

that converts a fuel into electricity using

electrochemical means. To qualify for the credit, the

fuel cell property must have a nameplate capacity of at

least one-half kilowatt of electricity using an

electrochemical process and an electricity-only

generation efficiency greater than 30%.

Qualified solar electric property. There is no limit on

the amount of qualified solar electric property costs

when figuring the residential energy efficient property

credit.

Subsidized energy financing. Any amounts provided

for by subsidized energy financing cannot be used to

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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 efficiency credit.

CAUTION
Form 5695 (2008) Page 4

Joint occupancy. If you occupied your home jointly,

each occupant must complete his or her own Form

5695. To figure the credit, the maximum qualifying

costs that can be taken into account by all occupants

for figuring the credit is $6,667 for qualified solar

electric, solar water heating, or geothermal heat pump

property; and $1,667 for each one-half kilowatt of

capacity of qualified fuel cell or small wind energy

property (not to exceed $13,333 for qualified small

wind energy property). The amount allocable to you is

the lesser of:

1. The amount you paid, or

2. The maximum qualifying cost of the property

multiplied by a fraction. The numerator is the amount

you paid and the denominator is the total amount paid

by you and all other occupants.

These rules do not apply to married individuals filing

a joint return.

Specific Instructions

Line 1

Enter the amounts you paid for qualified solar electric

property. See Qualified solar electric property costs on

page 3.

Line 5

Enter the amounts you paid for qualified solar water

heating property. See Qualified solar water heating

property costs on page 3.

Line 9

Enter the amounts you paid for qualified fuel cell

property. See Qualified fuel cell property costs on page 3.

TIP

Also include on lines 1, 5, 9, 13, or 18, any

labor costs properly allocable to the onsite

preparation, assembly, or original installation

of the property and for piping or wiring to

interconnect such property to the home.

Line 28

If you cannot use all of the credit because of the tax

liability limit (line 26 is less than line 23), you can carry

the unused portion of the credit to 2009.

Paperwork Reduction Act Notice. We ask for the

information on this form to carry out the Internal

Revenue laws of the United States. You are required to

give us the information. We need it to ensure that you

are complying with these laws and to allow us to figure

and collect the right amount of tax.

You are not required to provide the information

requested on a form that is subject to the Paperwork

Reduction Act unless the form displays a valid OMB

control number. Books or records relating to a form or

its instructions must be retained as long as their

contents may become material in the administration of

any Internal Revenue law. Generally, tax returns and

return information are confidential, as required by

section 6103.

The average time and expenses required to complete

and file this form will vary depending on individual

circumstances. For the estimated averages, see the

instructions for your income tax return.

If you have suggestions for making this form simpler,

we would be happy to hear from you. See the

instructions for your income tax return

Married taxpayers with more than one home. If you

or your spouse lived in more than one home, the credit

limits would apply to each of you separately. For

qualified fuel cell property, the homes must be your

main homes. If you are filing separate returns, both of

you must complete a separate Form 5695. If you are

filing a joint return, figure your nonbusiness energy

property credit as follows.

1. Complete a separate Form 5695 for each home

through line 21.

2. On one of the forms, complete line 22. Then, figure

the amount to be entered on line 23 of both forms and

enter the combined amount on line 23 of this form.

3. On the dotted line to the left of the entry space for

line 23, enter “More than one home”. Then, complete

the rest of this form.

4. Attach both forms to your return.

Qualified small wind energy property costs.

Qualified small wind energy property costs are costs

for property that uses a wind turbine to generate

electricity for use in connection with your home located

in the United States. The home does not have to be

your main home.

Qualified geothermal heat pump property costs.

Qualified geothermal heat pump property costs are

costs for qualified geothermal heat pump property

installed on or in connection with your home located in

the United States. Qualified geothermal heat pump

property is any equipment that uses the ground or

ground water as a thermal energy source to heat your

home or as a thermal energy sink to cool your home.

To qualifiy for the credit, the geothermal heat pump

property must meet the requirements of the Energy

Star program that are in effect at the time of purchase.

The home does not have to be your main home.

Line 13

Enter the amounts you paid for qualified small wind

energy property. See Qualified small wind energy

property costs on this page.

Line 18

Enter the amounts you paid for qualified geothermal

heat pump property. See Qualified geothermal heat

pump property costs on this page.

Example. Taxpayer A owns a house with Taxpayer B

where they both reside. In 2008, they installed qualified

solar water heating property at a cost of $8,000.

Taxpayer A paid $6,000 towards the cost of the

property and Taxpayer B paid the remaining $2,000.

The amount of cost allocable to Taxpayer A is $5,000

($6,667 X $6,000/$8,000). The amount of cost allocable

to Taxpayer B is $1,667 ($6,667 X $2,000/$8,000).

Line 25

If you are claiming the child tax credit for 2008, include

on this line the amount from line 12 of the Line 11

Worksheet in Pub. 972.

TIP

If you are not claiming the child tax credit for

2008, you do not need Pub. 972.