Solar Panel Tax Credit

[Daddy_of_3]

Hi,

If I build a home and I am the owner at the time of construction and I install solar panels on the house in October and then sell the home in November of the same year do I still get to claim the solar tax credit even though I don't own the home any longer at tax time?

[Opus 17]

For the residential credit under IRS section 25D, you can only claim the credit for solar installed on a home you use as your residence.  It doesn't have to be your main residence or your only residence (it can be your vacation home, for example), and you don't even have to own it, but you must be using it as a residence at the time you install the solar. 

Are you going to live in the home, or are you a builder?  I believe there is a different solar credit that is available to home builders. although I don't know the location in the tax code. 

[Daddy_of_3]

I am the owner and the builder. Either my wife and I will live in it OR our 28 yr old daughter will live in it. 

[Opus 17]

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@Daddy_of_3 wrote:

I am the owner and the builder. Either my wife and I will live in it OR our 28 yr old daughter will live in it. 

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You will need to decide who lives there before you plan to claim the credit.  The IRS has no rule on how long the home must be your residence, but it can't be a sham.  For example, sleeping there one night in a sleeping bag before your daughter moves in all her stuff may not qualify to make the home your residence.  If you moved in for 2 or 4 or 6 months, that would probably be enough.  If you want to push the envelope, you should hire your own professional tax advisor to help determine if the house qualifies as your residence.

Or, if it is your daughter's residence, she can claim the credit if she pays for the installation. She does not have to be the owner. 

[Daddy_of_3]

So....  if myself (the builder) was to pursue the tax credit what would that look like under the tax code?

[Daddy_of_3]

I am asking all these questions because in the State of WA there is a bit of a challenge under the new construction Energy credit rules. We must achieve 6 energy credits to have the home approved for occupancy. Getting 5 credits is easy enough but that 6th credit is really challenging. 

Options include:

A:  All star rated energy appliances including ductless dryers and such. Very Expensive and not a great design.

B:  2 air volumes of loss or less in a home pressure air leakage test. About 6% of homes pass this test. Hard to get the credit after all the extra cost and work that went into insulation, sealing, drywall precautions, etc.

C:  Install solar - Pretty Expensive unless there is a cash incentive that comes back to the builder/owner to help achieve an occupancy permit.