Claiming depreciation on a residential solar system

[filipn]

Hello all,

I had solar panels installed on my residence during the year. I have been in touch with an accounting firm that in addition to the federal tax credit, I also can claim depreciation on the system even though they are not being used for business. What they are pointing at is in IRS publication 946 ("How To Depreciate Property"), the publication allows for depreciation of "income-producing property". They say that since my panels produce excess energy and that the income paid to me by the utility provider should be clearly classified as income under the IRS guidance, logically the panels then qualify as "income-producing" even though they are not connected to a business. 

I have read in other places that residential panels would not be qualified for depreciation and am curious to hear whether there are any opinions on the matter from the community. 

Thank you 

[RobertB4444]

No, nothing on a personal residence that isn't used for a business can be depreciated.

If you were to go into a business for providing electricity using your solar panels then you could deduct depreciation as well as any relevant expenses.  As the current IRS regulations are set up, though, the payments that you receive are entered as "other income" on the 1040 and are not subject to self-employment tax.

This is an article about a lot of the aspects of residential solar panels and their taxable attributes.