Federal Solar Engery Tax Credit carry over multiple years (with source)?

[slyeddie]

Hi,

We are very close to pulling the trigger on a 2023 solar panel installation. Assuming that we otherwise qualify for the credit, we just need to confirm with absolute certainty (hopefully an authoritative source) that we can carry over the credit for multiple years (we think we will need about 3 years to recoup the entire credit, but maybe 4).

Every example seems to only show the carry over for just 1 additional year.

Thanks!

[DanaB27 · Accepted solution]

Yes, the unused Residential Clean Energy Property Credit can be carried forward to future tax years.

According to the IRS: "Under the Residential Clean Energy Property Credit: a taxpayer may carry forward the unused amount of the credit to reduce tax liability in future tax years."

Please see IRS FAQ about Energy efficient Home Improvements and Residential Clean Energy Property Credits and What Is the IRS Form 5695? for additional information.
 

[slyeddie]

Thanks for the quick reply! So is there any clear limitation on "future years"? 10? 20? We just don't want to lose any of the credit.

Thanks again! This is such a great community!

[JohnW152]

There's no clear carryover limit; as DanaB27 notes, the language is "future tax years."

You can see that Form 5695 provides for carryforward from 2021 (line 12), and carryforward to 2023 (line 16), so it's clearly allowed for multiple years.

The Residential Clean Energy Credit -- which includes solar property -- has been extended to property placed in service through December 31, 2034, so you'll probably be able to use up the credit at some point.