Solar panels as business expense?

[mecerto]

I installed solar panels in 2019 on my primary residence.  I know how to input Home Energy Credit to get my 30% rebate into Turbotax.  My question is, is it allowed to claim the solar energy generation from the panels as a small business?  And, therefore, claim the depreciation of the solar panels on my 2019-2023 income taxes?  If so, would I need to claim the energy I save each month as income as well?

[VictoriaD75]

Are you selling the energy? To qualify as a trade or business, the IRS maintains that you must be actively engaged in an activity for profit. You cannot just claim expenses, such as depreciation, unless it is related to a business activity. 

[mecerto]

Yes.  I am selling the energy to Green Mountain Energy.  On my solar bill the amount my panels generate is deducted from what my home uses. If we use more than we generate, I pay the bill for the difference. If we use less, we get a credit for the extra energy from Green Mountain Energy, which we receive back.  Therefore, our panels send electricity into our home and also onto the electrical grid and onto my neighbors homes. Does that qualify as a business activity?  Finally, thank you for the responses!

[ColeenD3]

There is still too little information to tell. Off the top of my head, I would say no. It sounds like you installed solar panels and by the way, can make a little money off it.

Here is further criteria from the IRS. You can decide if you qualify.

Generally, an activity qualifies as a business if it is carried on with the reasonable expectation of earning a profit.

In order to make this determination, taxpayers should consider the following factors:

• Does the time and effort put into the activity indicate an intention to make a profit?
• Does the taxpayer depend on income from the activity?
• If there are losses, are they due to circumstances beyond the taxpayer’s control or did they occur in the start-up phase of the business?
• Has the taxpayer changed methods of operation to improve profitability?
• Does the taxpayer or his/her advisors have the knowledge needed to carry on the activity as a successful business?
• Has the taxpayer made a profit in similar activities in the past?
• Does the activity make a profit in some years?
• Can the taxpayer expect to make a profit in the future from the appreciation of assets used in the activity