Solar Panels On Rental Property Tax Credit

I own a home that i rent out for residential use.

Solar panels on rental property tax credit.

Yes the residential energy efficient property credit allows for a credit equal to the applicable percent of the cost of qualified property. The residential renewable energy tax credit as the irs calls it can be an attractive way to save on the significant cost of installing solar panels or roofing an average sized residential solar. 48 provides for a solar energy tax credit for the installation of solar panels as part of the general business credit under sec. However tax literature is confusing on this subject as some but not all reports indicate that solar power installation for residential rental property does not qualify for the 30.

48 is more favorable. 48 one may reasonably assume that the irs would take a position consistent with letter ruling 201523014 and only permit the incremental costs as defined in regs. Filing requirements for solar credits. 1 48 9 k to be included in calculating the energy credit when adding a new roof and solar panels to the property.

The itc applies to both residential and commercial systems and there is no cap on its value. Qualifying properties are solar electric property solar water heaters geothermal heat pumps small wind turbines and fuel cell property. For commercial solar energy under sec. To claim the credit you must file irs form 5695 as part of your tax return.

If you end up with a bigger credit than you have income tax due a 3 000 credit on a 2 500 tax bill for instance you can t use the credit to get money back from the irs. The installer says that the solar system qualifies for the 30 federal tax energy credit. The federal solar tax credit also known as the investment tax credit itc allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes.