IRS Solar Tax Credit guide

[John E Davies]

I have noticed a little confusion here and there, I wanted to post this for reference. One thing to note is this:

The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.

So you can't claim it when you swap out failed AGMs, or add a new panel onto the roof, or change the controller. NEW Ollie customers only. Darn it....

IRS Solar Tax Credit FAQ

John Davies

Spokane WA

[mjrendon]

John,

Thanks for posting this.  

I am not a tax expert or a lawyer but it seems logical that if any additional solar panels and/or storage capacity are added that this would represent a new installation. You may want to discuss this with your tax expert.  

Example; If you left your tired AGMs in your trailer and added as a separate system the new LI batteries, a new controller and a single PV that this would be considered a new installation.

[Overland]

That’s an interesting note. There seems to be a lot more subtlety to the interpretations now than there was when I got mine.  I wonder how much of that has been driven by actual IRS auditing decisions vs creeping conservatism from accountants. 

[BlueHighways]

Wooop! 🥳

Thanks John! Claiming my new installation this year!

[SNY SD UP]

Thank You John,
    "• The solar PV system is located at your primary or secondary residence in the United States,".
So our RV's are considered a qualifying "Secondary Residences"???

Having recently retired, I was trying to simplify my life by shifting concern from "Qualified Deductions & Tax Credits" to dealing with all the Passive/Unearned Income. (insert smart-ass smiley face here).

Here I thought Wifey bought it to just "Get-US-Away" from home and enjoy the Great Outdoors.
I am new to all this, so I guess I will be checking with my Accountant on leveraging Tax Advantages of owning an RV. 

Not Complaining, but Sheesh...
 

As Usual, Regards

Bryan

[Jim_Oker]

3 hours ago, John E Davies said:

The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment.

I could read this a few ways. One way would  be that any piece of solar equipment can only have a credit taken once - i.e if you sell  it used  the next owner can't claim a credit. Adding new panels or replacing old panels with new might be allowable depending on how this  is  actually interpreted by the IRS.

[NCeagle]

I'm claiming the credit for the new Solar package on the Oliver as well as a solar suitcase and an additional solar panel on the roof.  I've added panels over the years to my house and always claimed those additions without any problem.  I'm not sure about upgrading/replacing components though.

[GAP]

Interesting timing on this discussion.  As things stand now, the fed solar tax credits are phasing out.  If my memory is accurate, 2019 and before allowed for a 30% credit.  2020 goes down to 26% and 2021 is 19%.  Could be a good time to do a cyber Monday upgrade!!!

[SeaDawg]

I don't know how I missed this, but the 2020 26 per cent tax credit has been extended to 2021 and 2022, instead if the reduced rate.(signed into law into December.)

It appears that some in Congress may also be looking at allowing a deduction for "stand alone storage." Not yet, but we'll see. 

 https://www.forbes.com/sites/ashleaebeling/2020/12/21/go-solar-enhanced-residential-solar-tax-breaks-in-year-end-spending-package-as-part-of-clean-energy-push/

Sherry

[bugeyedriver]

The IRS will count your RV as a second home, with all of the applicable tax benefits, as long as it has a sleeping area, a kitchen area, and a toilet area.  When initially considering traveling like this, I ran into a fellow with a beautiful, high end, Class A motorhome and he told me the payments on the bank loan were not so onerous after taking his allowable tax deductions into account.

https://blog.campingworld.com/rv-basics/rv-tax-benefits-you-should-know/

[SNY SD UP]

1 hour ago, bugeyedriver said:

The IRS will count your RV as a second home, with all of the applicable tax benefits, as long as it has a sleeping area, a kitchen area, and a toilet area.  When initially considering traveling like this, I ran into a fellow with a beautiful, high end, Class A motorhome and he told me the payments on the bank loan were not so onerous after taking his allowable tax deductions into account.

https://blog.campingworld.com/rv-basics/rv-tax-benefits-you-should-know/

Do you know, if the "RV as a second home, with all of the applicable tax benefits", contingent on the RV owner "Still" having a mortgage on the principle residence?  This will be the first accounting year we are Ollie owners, and we just want to make sure we are aware of this niche of Ollie ownership.  We meet with our accountant in a few weeks.

[SeaDawg]

Our accountant told us we could only file for one second home installation in a tax year. (You should ask yours, too. I'm definitely not a qualified tax expert.)

So, we did the house one year, the boat another. New rv system another.

There's nothing on the solar credit tax form that indicates having a mortgage.  But, you must own, not lease, the pv (solar) system.  (This is applicable for sticks and bricks home, where many people lease their pv system. The lessor gets the tax credit.)

Edited February 7, 2021 by SeaDawg

[SeaDawg]

I was talking with a friend this morning who was considering installing a new panel or two, and swapping agm for lithium. The federal tax credit takes a bit of the sting out, if batteries are installed with solar. No credit for batteries only, is my understanding. 

 

 

[mossemi]

SeaDawg, I think the key term in the information you posted is "system".  And my layman’s understanding of the tax credit information I read is that you need a complete solar system to claim the credit.  Our tax preparer thought I was nuts when I provided receipts for my solar system.  But she verified my claim was legitimate and my tax credit was over $1000.

I started out needing to replace a bad 6v wet cell battery.  But all of the battery information I found suggested replacing all 4 batteries.  I explored upgrading to AGM's but that was going to be in the $1500 range.  Then I found Battle Born 100 AH lithium’s for $925 to my door.  So $1900 for 200 AH's of lithium was not much of a stretch.  Then I looked into the tax credit which led my pea brain to justify a 3rd Battle Born battery, a Victron MPPT charge controller and 2-90 watt solar panels and all of the assorted cables, connectors, breakers and anything else needed to create a complete "solar system".  The only thing I couldn’t justify claiming as an expense was my labor which I have never been able calculate.

So in conclusion, I believe new solar panels or batteries or charge controllers alone do not qualify for the tax credít and it must be a complete solar system to justify a tax credit claim.

And of course it's possible that I am completely nuts and the IRS is going to be knocking on my door demanding $1000 back.

And that’s how I spent my COVID-19 vacation,

Mossey

 

[Ralph Mawyer]

You can deduct anything, until you are audited...but this looks pretty safe. 😉

[SeaDawg]

6 hours ago, Ralph Mawyer said:

You can deduct anything, until you are audited...but this looks pretty safe. 😉

If you choose to file for the credit, follow the guidelines, and check with your tax advisor. There are of course a number of specifics you must follow, and qualify.

This is a credit (comes off the bottom line), not a deduction. 

[Jps190]

Question for those who have taken this credit.  Turbotax asks for the address of the home where you made these improvements. Did you just your your "main home" address?

 

Thanks,

John

[dewdev]

This may be a strech, but I will ask anyway.

I bought a used Ollie last year and wondering if I can get this solar credit. I have the original build sheet so I know what the cost for just the solar system is.

I also have a tax advisor who I will ask but wondered if others have incountered this situation.

Thanks 

[John E Davies]

2 hours ago, dewdev said:

This may be a strech, but I will ask anyway.

I bought a used Ollie last year and wondering if I can get this solar credit. I have the original build sheet so I know what the cost for just the solar system is.

I also have a tax advisor who I will ask but wondered if others have incountered this situation.

Thanks 

If your used Ollie has any solar equipment on it, that credit has probably already been used, by the first owner, but if it never had any, then I think you could install a complete system and claim the credit for panels, controller, new batteries, inverter (if it doesn’t already have one) and associated parts and equipment, like cables and a monitor. I am not a tax advisor! But it is logical….. A second owner of a pre-existing solar setup cannot claim it. For one thing, you have to have all the receipts, and they all have to be in the same calendar year. That means, no long winter project, you need to finish the job completely by the end of the current year.

John Davies

Spokane WA