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rohitsi
Level 1

Solar ITC tax credit with purchase of lease

I bought a home in Jun 2021 and opted for lease of Solar System. Now since I was made aware of the ITC tax credit, I am planning to purchase out the lease (in full) during the same financial year 2021. Can I claim the tax credit now since I would be owning the Solar system in the same financial year?

4 Replies
Opus 17
Level 15

Solar ITC tax credit with purchase of lease

You don't say when it was installed.

 

The credit is claimed when the system is placed in service (installed, inspected, and turned on).  If that was under a previous owner, there is no credit for you as a subsequent owner.  I think if you installed the system in 2021 and purchased it in 2021, you can claim the credit, even though you originally picked the lease option.

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
rohitsi
Level 1

Solar ITC tax credit with purchase of lease

It's a new construction home so there is no previous owner.

 

The Solar company installed it in Jun 2021  and activated in Aug 2021

 

The Solar company tells me since I chose the lease option initially, the solar company would get the credit even though I am purchasing out the lease in the same financial year.

 

Online search doesn't talk about this scenario hence would be great if you can help.

Opus 17
Level 15

Solar ITC tax credit with purchase of lease


@rohitsi wrote:

It's a new construction home so there is no previous owner.

 

The Solar company installed it in Jun 2021  and activated in Aug 2021

 

The Solar company tells me since I chose the lease option initially, the solar company would get the credit even though I am purchasing out the lease in the same financial year.

 

Online search doesn't talk about this scenario hence would be great if you can help.


I can't comment on that specific situation.  I don't see anything that would bar you from claiming the credit if you purchase the system in the year it was installed, even though you leased for a short period of time.  But I am not an enrolled agent, and I also don't know which section of the code they would use to claim a business credit (it's not the residential credit in §25D because they don't own the home) so I can't look for how the two interact. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
AmeliesUncle
Level 12

Solar ITC tax credit with purchase of lease


@rohitsi wrote:

 

The Solar company tells me since I chose the lease option initially, the solar company would get the credit even though I am purchasing out the lease in the same financial year.


 

They are correct.  The expense is considered to happen when the installation is completed.  So in your case, the solar company owned it at that time, so they get the credit.

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