Solar federal tax credits: Multiple claims for the same property?

[mprabs]

Hello,

We bought a new home in 2022 and paid about $15k for solar. However, we realized later that it was a minimum configuration offered by the builder/solar provider.  Now we are looking to expand on the solar capacity and that is going to cost us another $25k in 2023 (or 2024 whenever we are able to undertake the installation). 

My questions are:

1. Since I bought this as a new home but got the keys in June, can I claim the entire expense in 2022 tax year or am I required to pro-rate it?

2. Is it possible to claim 2 different solar federal tax credits in different years (in this case 2022 and 2023)?

3. Do I have to claim solar federal tax credits in the same tax year in which the expenses were incurred or can I defer that? If I can defer that, is there a time limit to claim? Also, can I combine both of these expenses to claim at the same time (for example, can I claim both the expenses for tax credits together in 2024)? 

Thank you so much for your response.

[JohnW152]

To answer in order:

1. Since you purchased the solar panels -- as opposed to the contractor, while the house was being built -- you can claim the expense, and the whole expense.
2. Yes, you can claim the solar credit in more than one year, as long as it reflects payments made in each of those years.
3. As for timing, the costs can't be deferred, and costs from different years can't be combined. 

According to Costs in the Instructions for Form 5695:

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 clean energy 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.

[mprabs]

Thank you so much for your reply.  Just confirming that I can claim the installation costs 2 times as tax credits (first time install + upgrade install) for the same house one in 2022 tax year and one in 2023 or 2024 tax year whenever we complete upgrade install. Please let me know.

[JohnW152]

Yes, you can.

Just be aware that you can't claim any of the same expenses that you claimed on the first installation.

[CallieG]

Just looking to clarify this answer to my situation; We started our solar panel install in june 2022, including buying the panels and upgrading our electrical service, but the solar panel were not installed on my roof until March 2023.   

Can I take the Solar system credit for the expenses I paid for in 2022 even through the system was not install until 2023. Then next year take the Solar system credit for the remaining expenses incurred for the completion of the install in 2023?

Of course I cant take the same expenses, just the ones paid for in 2022 on my 2022 tax returns and same for 2023?

CallieG 

[PatriciaV]

According to Instructions for Form 5695, you may claim only costs that are paid, and system costs are considered to be paid at the time the installation is completed. Even though you purchased supplies and equipment in one year and the panels were installed the next year, you would claim the credit when the system was complete and functioning.