Solar Tax Credit: Can I continue to roll it over P...
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Level 2

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

Hi,

 

Thinking of installing Solar panels on my home. At the current 26% rate, we would receive a tax credit of around $8,000. The credit is set to expire in 2022 for residential owners, and last year we only paid $1,400 in taxes (and expect to be at that level for many more years)

 

Therefore, I would need several more years of rolling it over to take full advantage of the $8k credit. After 2022, will I be able to do that?

 

Thanks 

6 Replies
Employee Tax Expert

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

Yes, the unused credit will carry forward to future years if you tax liability limits the amount this year. However, it is not yet clear whether you can carry unused credits to years after the solar credit expires. The IRS has not made a determination on this issue. 

 

Federal Tax Credit for Residential Solar Energy

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Level 2

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

Thanks Victoria. Just to be clear, it sounds like the answer is "no", I can't take the credit after 2022, because it expires that year? Correct?

 

If that's the case, I'll only have 2 tax years left to use the credit ($8k) towards my taxes... 2021 and 2022.  Not a great scenario in my case given my income and the limited taxes I pay. 

Level 11

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

There is no indication that the credit expires in 2022.  As of now there is no credit for property that is "placed in service" after 2021, but that does NOT mean the carry forward credit expires.

Level 2

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

So you're saying if I get solar NOW in 2020, (and get the 26% ITC credit), I'll be able to "carry forward" the credit to future tax years? Even years past 2022, when buyers of Solar THEN don't get credits?

Employee Tax Expert

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

That is the area of the tax law regarding this issue that is unclear. Beginning in tax year 2022, the credit is not available to taxpayers, with a reduction in the credit leading up to that date. Per the IRS:

 

The residential energy efficient property credit allows for a credit equal to the applicable percent of the cost of qualified property. Qualifying properties are solar electric property, solar water heaters, geothermal heat pumps, small wind turbines and fuel cell property. Only fuel cell property is subject to a limitation, which is $500 with respect to each half kilowatt of capacity of the qualified fuel cell property. Generally, this credit for alternative energy equipment terminates for property placed in service after December 31, 2021. The applicable percentages are:

  1. In the case of property placed in service after December 31, 2016, and before January 1, 2020, 30 percent.
  2. In the case of property placed in service after December 31, 2019, and before January 1, 2021, 26 percent.
  3. In the case of property placed in service after December 31, 2020, and before January 1, 2022, 22 percent.

Whether the carry over of the credit for existing placements will continue has not yet been determined. 

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Level 11

Solar Tax Credit: Can I continue to roll it over PAST 2022, the year it expires?

I don't see what is unclear.  There is NOTHING in the Code that indicates the carryover credit expires.  The "applicable percentage" for the original credit is based on the "placed in service date", not when the residual credit is used.

 

Obviously things could always change, but as of now, the Code has NO indication that it would expire.

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