I am self-employed and looking into a vehicle purchase in 2022. I will look at purchasing a qualified vehicle that is both EV and GVWR of 6,000 lbs. I plan on utilizing 100% depreciation (all business use 2022) AND $7,500 Federal tax credit for the EV with a qualified manufacturer. Easy enough...BUT
Furthermore, I am looking into adding solar for my home in 2022. Current Federal tax credit is 26%. This is where I am trying to get creative. I can go at this a lot of ways, but I suppose I will try the most extreme option and see what the community thoughts are.
I install solar panels that cover my estimated kWh use for the electric vehicle based on historical driving mileage (15,000 miles p/year) and low end of an estimate on total kWh that I will utilize for the year. Furthermore, I would not put the solar panels into "service" (turn on, connect to grid) until the last day of the year for "commercial purposes" (i.e. my EV). I would then take the 26% Federal tax credit and utilize the MACRS approach for bonus depreciation for the cost of the system (see additional resource the Department of Energy below). I would plan on owning my EV for 5 years and utilize for a minimum of 50+% for business use (historically closer to 80%).
Additional resource with regards to solar panels from the Department of Energy: https://www.energy.gov/sites/prod/files/2021/02/f82/Guide%20to%20the%20Federal%20Investment%20Tax%20Credit%20for%20Commercial%20Solar%20PV%20-%202021.pdf
Seems plausible given that I am putting solar panels to use in a "commercial setting". That said, what are your thoughts and what additions/changes would you make to pass the eye test as it were. I would keep all documentation from the solar provider and EPA ratings for my vehicle. Ready....BREAK!
To clarify, are you putting these solar panels on your house or is it some other commercial setting?
The solar panels are on my personal home, yes. I currently take the simplified method for the home office deduction.
An additional thought. Could I possibly take a percentage of electrical use and deduct that from the solar panels in the future?
Ex:
Purchase of solar panel system $30,000
Fed tax credit at 26% = $7,800
Net Cost $22,200 ( I will use this for the below example)
(Correct amount that I could use as a tax basis for the approach below? Given the previous article I mentioned, it seems more than the net cost??)
For the sake of ease, let's say these numbers are the same every year:
System puts out 10,000 kWh
EV has meter on the plug in and uses 5,000 kWh
EV is used for 80% biz and 20% personal
Use of the MACRS approach?
Year 1 - 2022
(.2 x $22,000) x 0 = $0 deduction (let's say I didn't get the EV until the last day of the year and panels were installed earlier, so no business used in year 1). -
Year 2
(.32 x $22,000) x .80 = $5632 deduction for 2023
Year 3
(.192 x $22,000) x .80 = $3379 deduction for 2024
Year 4/5/6 ect.
Yes, you can claim the 26% nonrefundable credit on your 2022 personal tax returns.
No, you cannot capitalize an improvement to your personal home as a business asset.
You can, however, switch to the Actual Expense method for your Business Use of Home deduction and count the actual usage cost of the electrical power for your office and the EV and other general maintenance costs for your home.
See Publication 587 for more information on allowable costs for the Actual Expense calculation method of the deduction.