@ronaldlar1 wrote:
Hi,
I get there is, in my mind, some ambiguity in the instructions for 5695 around Multiple Owners/residents of a home when it comes to installing solar and getting the credit. Historically IRS would point towards ownership and payments for deductibility of certain expenses and credits - you needed to own and then pay an amount towards that ownership percentage. If I owned 50% then I would be entitled to deduct up to 50% provided I paid it.
The solar credit seems pretty loose in that it is not clear you need to own property except for reference to adjusting basis of home for credit later - so I think ownership is required.
My concern is, while I can see why you suggest that even one 50% owner in a residence where to live and own as tenants in common, could pay for solar and then get the full 30% credit on a property owned only 50%, my concern is I don't see that in black and white in IRS instructions or code - I may be missing it and I just don't want to mis-step here.
Let me know your thoughts on this as the safe answer seems to be to ensure that all tenants in common owners on a deed each contribute to solar purchase in alignment with their share of ownership. But your suggested approach allowing any one resident owner to purchase solar and get full credit is simpler if supported by tax law which based on your conviction, I suspect it is. Please help me understand this more,
Thanks!
Ownership is not required. To qualify for the solar panel credit you must pay for a solar system on a home you use as a residence. It does not even have to be your main residence, and you do not have to own it. (Other parts of the energy efficiency credits have different rules.) Regardless of the instructions, that's the law.
Personally, I think it would be beyond foolish to pay for a solar system to be installed on a home I don't own, since I immediately lose all property rights I might have in the solar system as soon as it is permanently attached to someone else's real property. But the law allows it. (One common scenario is a child helping to pay for a system on a parent's home or vice versa.)
You claim the credit on what you actually pay, so there's no issue of over-claiming. A $10,000 system will get someone a $3000 credit. If 5 people split the cost at $2000 each, they would each get $600 for a total credit of $3000, same as if one person paid for the whole thing.
