Can a trust claim a Solar Tax Credit?

[alanwing]

I can't find any form in the TurboTax Business Software for a Trust to be able to claim a solar tax credit.  Is a Trust not eligible for a solar tax credit?

[tagteam · Accepted solution]

"Can a trust claim a Solar Tax Credit?"

If you are referring to a residential energy credit for the cost of an improvement, then a (nongrantor) trust that owns residential property would not qualify.

See https://www.irs.gov/instructions/i5695#idm140296600518416

[taxques]

Can I place my personal residence into a grantor trust and still claim the residential tax credit?  The trust would have no income, but I as the grantor and sole trustee have income.  Is it all filed on a single tax return?

[Lisa995]

Solar credit isn't refundable, so if you have no income and no tax liability, the credit wont do you any good.

[iOne]

I don't see anything specific in form 5695, other that a statement that it the energy  credit is restricted your "home".

Ok, but what if your home is held in a non-grantor trust for your benefit?

Is it possible to file form 5695 ?

[AmyC]

Form 5695 says it has to be your main home. I believe you could claim that position, make a statement to that effect and attach it to your return. Then wait and see if it is challenged. You might end up in tax court but you have a point in it being your main home. We don't have time to scour the legal cases, it may be worth your while.

[iOne]

This is at best a confusing situation.  The first question is "this your primary home", a "second home", or a "rental property", and what form of trust are you talking about.

The best guide I've found is:
https://www.thetaxadviser.com/newsletters/2017/oct/credit-residen[product key removed]s.html

https://recsolar.com/blogs/calculate-solar-tax-credit-2020/

"Business credit

While Sec. 25D does not allow a solar tax credit for the cost of installing solar panels for use in residential rental property, Sec. 48 is more favorable. Sec. 48 provides for a solar energy tax credit for the installation of solar panels as part of the general business credit under Sec. 38. Under Sec. 48(a)(5)(D)"

"Sec. 48(a)(3)(A)(i) defines equipment that uses solar energy to generate electricity or to heat or cool a structure as energy property, as long as it is not used to heat a swimming pool."

Which appears to lead to use of form 3468 and form 3000 to report a Investment Tax Credit for solar for a trust

https://www.irs.gov/pub/irs-pdf/f3468.pdf