Insulation Law and Legal Definition
According to 26 CFR 1.23-2 (Title 26, Internal Revenue; Chapter I, Internal Revenue Service, Department of the Treasury; Subchapter A, Income Tax; Part 1, Income Taxes; Normal Taxes and Surtaxes; Determination of Tax Liability; Changes in Rates During a Taxable Year), the term "insulation" means “any item that satisfies all of the following conditions:
(1) The item is specifically and primarily designed to reduce, when installed in or on a dwelling or on a water heater, the heat loss or gain of such dwelling or water heater. To qualify as insulation the item must be installed between a conditioned area and a nonconditioned area (except when installed on a water heater, water pipe, or heating/cooling duct). Thus for example, awnings do not qualify as insulation. For purposes of this section the term "conditioned area" means an area that has been heated or cooled by conventional or renewable energy source means. Insulation includes materials made of fiberglass, rock wool, cellulose, urea based foam, urethane, vermiculite, perlite, polystyrene, and extruded polystyrene foam.
(2) The original use of the item begins with the taxpayer.
(3) The item can reasonably be expected to remain in operation at least 3 years.
(4) The item meets the applicable performance and quality standards prescribed in § 1.23-4 (if any) that are in effect at the time the taxpayer acquires the item. The term "insulation" shall not include items whose primary purpose is not insulation (e.g., whose function is primarily structural, decorative, or safety-related). For example, carpeting, drapes (including linings), shades, wood paneling, fireplace screens (including those made of glass), new or replacement walls (except for qualifying insulation therein) and exterior siding do not qualify although they may have been designed in part to have an insulating effect.”
