Can i claim my 30 % federal energy efficiency credit if i financed my solar panels & if so do i claim the $ amount i paid during the year or the entire loan amount?

[MichaelDC · Accepted solution]

Yes.  For the  energy credit, put in the total cost of the system as if you paid cash. It doesn't matter that you're financing the purchase. Do not enter any additional amounts for subsequent payments.

[sweettrose]

According to IRS bulletins the solar Financed under the Pace program cannot be claimed as property tax but the interest can be claimed under the mortgage interest section. Do claim my energy rebate and still claim the interest on the loan?

[MichaelDC]

That's correct. You can treat the interest payments (only) as though the interest was paid on a second mortgage for home improvements on your property. If you are deducting sales tax expense instead of state income tax, you can also deduct the sales tax related to the installation of your Solar Panels. You would report it as a major purchase.

[96hoangyen]

Hi, I am also concerned about this. I am also financing my solar system. I filed Form 5965 (2022) and may get a part of the solar credit tax. And, now I continue to file Form 5965 (2023) to get the rest of the solar credit to gain the full solar credit. I put the total cost of the installed solar system of $30,000 in "qualified solar energy cost" (form 5965 - 2022). But, what amount should I put in the "solar energy cost" of form 5965 (2023)? Will I apply $30,000 again or the amount I financed monthly for the solar system for the whole last year?

[AnnetteB6]

You would not enter the total cost of the solar system again on your 2023 tax return.  Instead, there should be a credit carryover amount from your 2022 tax return that can be used for your 2023 return.

The amount of the carryforward should be included automatically if you used TurboTax to prepare your 2022 return.  Otherwise, take a look at your 2022 tax return and find Form 5695.  Line 16 should show the amount of credit being carried forward to 2023.  

As you go through the Home Energy Credit section of TurboTax, keep progressing through the screens until you reach one that asks if you Have a 2022 Home Energy Credit to Carry Forward.   When you say 'yes' to this question, there will be a box to enter the number from your 2022 Form 5695 line 16.  This will apply the credit to your 2023 return.

@96hoangyen