My position is this ... the IRS says you must "reduce your basis in your home" by the credit and you cannot do this if you do not own the home. Some say that doesn't matter but the way the instructions are written it keeps referring to YOUR home and it being constructed (only owners build their homes) and if this was a condo you own.
From the IRS form 5695 instructions :
Who Can Take the Credits
You may be able to take the credits if you made energy saving
improvements to your home located in the United States in
2021.
Home. A home is where you lived in 2021 and can include a
house, houseboat, mobile home, cooperative apartment,
condominium, and a manufactured home that conforms to
Federal Manufactured Home Construction and Safety
Standards.
You must reduce the basis of your home by the amount of
any credit allowed.
Main home. Your main home is generally the home where
you live most of the time. A temporary absence due to special
circumstances, such as illness, education, business, military
service, or vacation, won't change your main home.
Costs. For purposes of both credits, costs are treated as being
paid when the original installation of the item is completed, or, in
the case of costs connected with the reconstruction of your
home, when your original use of the reconstructed home begins.
For purposes of the residential energy efficient property credit
only, costs connected with the construction of a home are
treated as being paid when your original use of the constructed
home begins. If less than 80% of the use of an item is for
nonbusiness purposes, only that portion of the costs that is
allocable to the nonbusiness use can be used to determine
either credit.
Only the residential energy efficient property credit (Part
I) is available for both existing homes and homes being
constructed. The nonbusiness energy property credit
(Part II) is only available for existing homes.
IRS guidance issued with respect to the energy credit
under section 48, such as Notice 2018-59, does not
apply to the residential energy credits.
Association or cooperative costs. If you are a member of a
condominium management association for a condominium you
own or a tenant-stockholder in a cooperative housing
corporation, you are treated as having paid your proportionate
share of any costs of such association or corporation.
