Solar Tax Credit for Two Installations on Same Property

[dnt123]

Can I claim tax credit on two solar system installations for the same property?  I have never claimed tax credit on the property before and was wondering if I can combine the claim for the original solar system and additional panels that will be installed less than a year apart.

[TomK2023]

Maybe.  Did both installations occur in 2022?  You can only claim expenses paid for during 2022 on your 2022 tax return..  If you paid for expenses incurred during 2021, you can only claim that amount on your 2021 return.

[Opus 17]

You can only claim the solar credit for a home that you use as a residence.  It doesn't have to be your main residence, but it must be a residence.  So if you have (for example) a main house and a mother-in-law cottage, you could only claim the credit for any system that feeds the main house, unless you live in the cottage for at least part of the year.

The system must provide power to your residence, so a system on a shed that powers the house is eligible, but a system that powers a greenhouse is not eligible unless it is cross-connected to the house and feeds the house.  So that might create a kind of loophole, if you put panels on your house and on the mother in law cottage but they were all connected as one linked system that feeds the entire property, that might be allowable.  

If you install qualifying property twice, both installations would be eligible, and the credit is claimed based on the date when it is inspected and turned on, not when you paid or signed the contract.  

[dnt123]

Hi, thank you for the clarification.  The original installation was in 2022 and the addition is for 2023 so does that mean I cannot claim both at one time since they were not installed the same year? 

[dnt123]

This property is my primary residence,  the original panels were installed in 2022 and additional panels will be installed this year.   Thanks.

[Opus 17]

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@dnt123 wrote:

This property is my primary residence,  the original panels were installed in 2022 and additional panels will be installed this year.   Thanks.

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So the 2022 installation is claimed on your 2022 return and the 2023 installation will be claimed on your 2023 return.   

[dnt123]

I thought  you can only claim one time per residence.  Is this not true?

[Opus 17]

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@dnt123 wrote:

I thought  you can only claim one time per residence.  Is this not true?

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Although this is frequently reported, there is nothing in the law that says the credit can only be claimed once per residence.  It can only be claimed once per installation, but if you install two different systems in different years (or expand the system), you can claim the credit each time.  And in fact, the Inflation Reduction Act added a clarification, that installation of batteries for a solar system only qualifies if the capacity is 3kWh or more.  Since batteries would normally be included in the overall price of a new system that included them, the only practical reason to list batteries as a separate improvement is if Congress contemplated people adding batteries to existing systems to improve the efficiency. 

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

[dnt123]

Thank you for the clarification, much appreciated.