In early 2024, I invested in solar panels for my home, and I am claiming that investment as a clean energy tax credit for 2024. However, I have a basement apartment in my home that comprises roughly 30% of the home's square footage. Can I also claim the roughly 30% of the cost of the solar panels as a capital improvement for the basement apartment? If so, exactly where do I do so in Turbotax.
The "Residential Clean Energy Tax Credit" for solar has rules if it is used less than 80% for personal purposes.
I suspect you need to claim 70% of the cost as the Residential Clean Energy Tax Credit on Form 5695. Then claim the other 30% on Form 3468 for the rental portion.
Yes, you can depreciate it for the rental. You would depreciate 30% of the cost, MINUS 1/2 of the business credit on Form 3468. In the rental section, you would enter an "asset" for depreciation, and it would usually be depreciated over 5 years.
No "suspect" about it. The homeowner claims 70% of the cost for the personal tax credit. The other 30% is a business expense. The asset is added to the property and depreciated, and there is a separate (different) business solar energy credit that can be claimed for the 30% rental portion.
Thanks for your answer. I did enter the approximately 30% of the cost as a new asset under my rental property, but it looks like it is being depreciated over 27.5 years, not 5 years. Does that sound right to you?
Yes, as a rental improvement, the solar installation would be depreciated over the same period as the residential property, which is 27.5 years.
@KASinOR wrote:I did enter the approximately 30% of the cost
it looks like it is being depreciated over 27.5 years, not 5 years.
Did you enter the rental percentage MINUS 50% of the business/rental solar credit?
Although many electric items take on the lifespan of the building, solar is depreciated over 5 years. Perhaps entering it as an appliance may do the job.