Residential Energy Credit Carryover on Form 5695 - In a Future Year After a House Sale

-jb · ‎January 20, 2020

I can't believe I'm asking this question, but I just have to do it. We installed solar panels on our main residence, but then we sold it in 2018. We moved to a new house in a different state in that same year. We had been taking credits in the past using Form 5695, and I just saw that we have a solar energy credit that carried over into our 2019 tax forms in TurboTax. I was about to delete the form, but then I thought I would check the instructions to see if there was any reason it could carryover to future years with the original owner, even they do not still own the residence. (I tend to take things very literally, and the instructions do not address this.) Can we take a credit in the year after the house sale, or did we lose the balance of the credit that was carried over?

Thank you for your help in understanding this better

KurtL1 · ‎January 20, 2020

Yes, the sale of the home after the installation of the qualified solar electric system does not disqualify you for the residential energy credit.

Take the steps below to enter your qualified solar costs:

Sign in to TurboTax Online, then click Continue your return and pick up where I left off (if you are using TurboTax CD/ Download, then just open your return on your computer;
Enter energy improvements in the TurboTax Search, at the top right of the screen, and press the Enter key, then pick Jump to Energy Improvement;
On the Energy-Saving Home Improvements screen, click the Yes, we make energy-efficient improvements or have a carry forward question and click Continue;
Answer the following interview questions for the energy efficient improvements you made.

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-jb · ‎January 21, 2020

KurtL1,

Thank you for answering my question and for the directions on the steps to take. I am very grateful.

John

KurtL1 · ‎January 21, 2020

You are welcome.

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SARAHHD · ‎June 8, 2022

I am confused, since in the sale of the home the credit is recaptured...how can the credit carry forward after the sale of a home? Can anyone weigh in?

SARAHHD · ‎June 8, 2022

I am confused, since in the sale of the home the credit is recaptured...how can the credit carry forward after the sale of a home?

Mike9241 · ‎June 8, 2022

The REC reduces the basis which increases the gain (or reduces loss - not deductible) on sale. the fact that you couldn't use all of it in the year it arises is a different issue.

or are you thinking of the first time home buyer credit which had to be repaid with any unpaid balance due in the year of sale

Residential Energy Credit Carryover on Form 5695 - In a Future Year After a House Sale

Deductions & credits

Deductions & credits

Deductions & credits

Deductions & credits

Deductions & credits

Deductions & credits