We replaced our solar inverter in 2018. Can we take the solar tax credit for the repair or maintenance of our existing solar energy system?

[Cindy0H]

No, you cannot. That would be considered a repair. Repairs or maintenance are not included in this credit. 

From the IRS:

For purposes of the credit, 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.

Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home. 

The IRS instructions:

https://www.irs.gov/pub/irs-pdf/i5695.pdf

If you have other questions about this, ask in the comment section below.

[robertnues]

Hello Fellow Taxpayers, I'm not convinced about the Reply from CindyOH. I can see that some forms of repair or maintenance would not be covered, as they do not include 'original installation' of any solar energy items. However, if an inverter is replaced, then I think it would be a correct interpretation to say that the replacement inverter is a solar energy item that is originally installed in the year that the replacement occurs, and thus would be covered. If we are only going by the IRS i5695 instructions, this seems to me to be the most logical interpretation. Is there any source of clarification beyond the instructions? I've done a rather thorough search of the internet just now, 11/16/2022, and can't find any mention, one way or the other? Does anybody know more? Thanks

[TomD8]

@robertnues --

I think your interpretation is correct.  26 US Code 25D (d)(2) states:

"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."

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

In addition, 26 US Code 25C (c)(1)(B) defines "original use" this way:

"...the original use of such component commences with the taxpayer..."

26 U.S. Code § 25C - Energy efficient home improvement credit | U.S. Code | US Law | LII / Legal Inf...

This would also appear to support your position.

Of course, an IRS auditor might not agree with any of this, especially if he equates "replacement" with "repair".

[Opus 17]

I have not seen clarification from the IRS on repair or replacement vs original installation, although to be honest I have not looked for such clarification.

The auditor is supposed to use the audit manual, but might have their own opinions.  The audit manual is supposed to follow the regulations, but we know of cases where the tax court has ruled that auditors were wrong. The regulations are supposed to follow the law, but we know of cases where courts have ruled that the law means something different than what the IRS wanted it to me.  So if someone claimed a credit for a replacement or a repair, and was audited, they might need to pursue the matter to a higher court to get a favorable answer.