Income Tax Deduction for the Installation of Building Insulation

<p>A residential taxpayer is entitled to an Indiana income tax deduction on the <span>materials and labor used to install insulation in a taxpayer’s principal </span><span>place of residence in Indiana. </span></p><p></p><p><b>Amount</b></p><p></p><p></p><p>The insulation deduction is limited to the cost of the insulation <span>(including installation costs) or $1,000, </span><span>whichever is less. The deduction must be taken for the tax year during which the </span><span>materials were installed. Excess costs may not be carried forward to </span><span>subsequent tax years. </span></p><p></p><p><b>Eligible Technologies</b></p><p></p><p>This deduction includes the following forms of <span>insulation: material made from fiberglass, rock wool, cellulose, </span><span>Styrofoam, urea-based foam urethane, vermiculite, perlite, </span><span>polystyrene, reflective insulation, extruded polystyrene foam, blown-in </span><span>insulation, rolled insulation, sheet Styrofoam insulation, and wrap </span><span>insulation. Other materials that qualify for this deduction include </span><span>weather stripping, storm windows, storm doors, thermal pane </span><span>windows, and caulking. </span></p><p></p><p>The following materials do not qualify for the <span>insulation deduction: automatic setback thermostats, flue opening </span><span>modifications, mechanical furnace ignition systems, solar energy </span><span>equipment (such as collectors, rock beds, and heat exchangers), </span><span>wind energy equipment (such as windmills), geothermal energy </span><span>equipment, furnace replacement burners, meters, wood burning </span><span>stoves, sky lights, heat pumps, and temporary plastic window </span><span>coverings. Materials which are primarily structural or decorative </span><span>do not qualify for this deduction.</span></p><p></p><p></p><p></p><p></p><p><b>Requirements</b></p><p></p><p>The materials must be installed in the taxpayer’s principal place <span>of residence in Indiana. If the taxpayer’s principal residence is </span><span>a rental property, the deduction is available only if the costs </span><span>incurred for insulation are not reimbursed by the landlord. </span></p><p></p><p>The portion of the residence being insulated must have been <span>built at least three years prior to the taxable year for which the </span><span>deduction is taken.</span></p><p></p><p>The materials must be new and not used as a replacement for <span>other material. Materials replacing broken or worn-out materials </span><span>do not qualify for this deduction. </span></p><p></p><p></p><p></p><p></p><p></p><p><b>Process for Claiming the Deduction</b></p><p></p><p>The taxpayer must submit with the Indiana tax return invoices <span>that document the cost of labor and materials used in installing </span><span>the insulation. These invoices must also provide the names </span><span>and addresses of the persons who performed the labor in </span><span>installing the insulation. </span></p><p></p><p></p><p></p>