Can you get a tax credit for expanding your existing solar system if you already got a credit on the original installation some years ago?

[MichaelG81]

No. You may only claim credit once per house. For example, if you added it on a second house it may be claimed again. On this link from energy.gov it states the credit is only for the "original installation", on the first page.

@Mudrigg

[Opus 17]

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@bratman wrote:

How can we answer line 18 and not be disqualified?

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You are confusing two different credits.

Section 25D Residential Clean Energy Credit covers solar power, geothermal, and wind energy, basically, energy generation.  This credit is on page 1 of form 5695.  It has no lifetime limitations.

Section 25C, Energy Efficient Home Improvement Credit, covers energy efficient improvements including insulation, doors, windows, and specified energy property.  Energy property includes heat pumps, hot water heaters, furnaces and air conditioners.  These credits are on page 2 of form 5695.  For tax year 2022, there is a $500 lifetime limit on all section 25C credits per taxpayer, no matter what house they were installed in.  Starting in 2023, the $500 lifetime limit is removed and replaced with a $1200 annual limit.

If you made section 25C energy efficient improvements in 2022, you must enter the amount of any prior section 25C credits, and that may reduce or eliminate any credit you could claim for 2022.

[Opus 17]

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@MichaelG81 wrote:

No. You may only claim credit once per house. For example, if you added it on a second house it may be claimed again. On this link from energy.gov it states the credit is only for the "original installation", on the first page.

@Mudrigg

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This is a mis-reading.  The law has no such limitation.  The document you reference says "The solar PV system is new or being used for the first time. The credit can only be claimed on the “original installation” of the solar equipment."  This would mean that you can't claim the credit if you buy a house with a solar system already installed, you can only claim the credit if you are the installer.  But this statement says nothing about "only once per house".  If the taxpayer installs new equipment, they are eligible for the credit.  New equipment can include the first original installation, installation of an expanded system, or removal of an old system and installation of a new system.  

[bratman]

If I am reading you correctly, I only fill out page I, of form 5695.

What I get on line 15 of form 5695 sheet I, is then put-on line 5 of schedule 3 that carries down to line 7, and then from line 7 of schedule 3 put on line 20 of form 1040SR.

I do not even go to page II of form 5695.

[AmyC]

You stated that you want to add 10 panels in 2023.  There are some changes for 2023 and the 5695 will also change. Provided you meet the requirements, you could be able to deduct up to $1200 on your 2023 return. Actually, the credit is good for items placed in service through 2033 so you may want to add some each year to get full credit. See FAQ Energy, which has more links, including Residential Clean Energy Property: Qualifying Expenditures and Credit Amount for solar panels, which is part 1 of the 5695. Part 2 is for Energy Efficiency, see Energy Efficiency Requirements. 

The solar panels credit is for your primary home, possibly a second home. These are not for rental homes or new construction. See Qualifying Residence

@bratman    @opus is correct

[bratman]

I believe you are referring to page 2.

Part II Energy Efficient Home Improvement Credit, that has a limit

page1.

Part I Residential Clean Energy Credit does not.

[mhjlyle]

Did you ever get an answer to this question for a California system? We're also adding another/second system to our home. It's not an expansion of the existing system....it's a new system. The solar installer said we couldn't get the rebate....but that they could? Bizarre. Trying to find out if we'd get the 30% Federal Solar Tax Credit on the second system. We got some kind of credit 15 years ago when we put the first system on. Thanks!

[Opus 17]

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@mhjlyle wrote:

Did you ever get an answer to this question for a California system? We're also adding another/second system to our home. It's not an expansion of the existing system....it's a new system. The solar installer said we couldn't get the rebate....but that they could? Bizarre. Trying to find out if we'd get the 30% Federal Solar Tax Credit on the second system. We got some kind of credit 15 years ago when we put the first system on. Thanks!

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This was answered above.  There is nothing in the law that limits the solar credit to a "first" installation.  The law simply says

"The term “qualified solar electric property expenditure” means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer."

You can't get a credit twice for installing the same property (solar equipment).  You can't claim the same equipment twice, and you can only claim in when it is placed in service (installed, inspected and turned on, regardless of when it was contracted or paid for).  But there is nothing in the law that says you can only claim the credit once per house or once in your lifetime. 

https://www.law.cornell.edu/uscode/text/26/25D