Residential Clean Energy Property Credit

[peteZ88]

I constructed a second home which was completed in July 2023.  The second home included a solar electric system which cost an additional 37K.   Am I eligible for the 30% tax credit for the full cost of the system this year?   Some people suggest that I have to prorate the credit by the number of months I stayed there, but this doesn't seem to make sense and I can't find a reference to prorating this is the irs instructions.  Prorating seems to be used when you have personal and rental use, but I don't see where you need to prorate the credit for a second home not used for rental (while we may convert it to rental use in future years, it is not currently used for rental).  Thanks.

[Vanessa A]

Yes, if this is just your second home you can claim the full $37k for the solar credit.  You do not have to prorate the amount you paid or how much you can claim as long as you paid it and didn't split it with another person other than your spouse.  If you did own/build/pay for the cost with a person other than your spouse, then you would have to prorate it based on who paid what.  Other than that, you would take the full credit. 

The Residential Energy Credit is also a non-refundable credit, however this one can be carried forward to future tax years until this credit goes away which is currently set to happen in 2034.  So even though you can claim the entire amount, you may not receive the entire amount this year, if you do not have a big enough tax liability.