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ganmad7
Level 1

Solar Tax Credit for 2019

This may sound like a similar question.  I had solar installed in 2019. Despite my best efforts, the utility company did not switch on the system till Jan 2020. I paid 90% of the cost in Dec 2019 and 10% in Jan 2020. My question is if I can claim the federal tax credit for the cost in 2019. Previous similar questions have been advised that you can not since the install is considered complete when active. But here is a guidance from IRS suggesting a different standard. Please review this link before answering:

 

https://www.seia.org/initiatives/commence-construction-guidance

11 Replies
AmeliesUncle
Level 12

Solar Tax Credit for 2019

Is this for a business or is this for your home?

 

I haven't read the entire IRS notice, but it only applies to the business credit, not the personal credit.  Notice what your linked article says:

 

The Act provided that commercial solar projects utilizing section 48 which begin construction by certain specified dates will qualify for the ITC – eliminating the prior law requirement that a project must be placed in service to qualify for the credit. However, it is important to note that the change to a beginning of construction standard was not made to the section 25D residential credit, so individual taxpayers claiming the residential solar ITC must still have their projects placed in service before they can claim the credit.

RobertG
Expert Alumni

Solar Tax Credit for 2019

The instructions for Form 5695 state "For purposes of both credits, costs are treated as being paid when the original installation of the item is completed". So you should claim the credit in 2020.

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cww111
Level 1

Solar Tax Credit for 2019

My solar system was put in service Dec.2019

cww111
Level 1

Solar Tax Credit for 2019

Home

cww111
Level 1

Solar Tax Credit for 2019

So I have to wait until I do my 2020 taxes to take the credit

MaryK1101
Expert Alumni

Solar Tax Credit for 2019

If your home solar panels were installed and paid in December 2019, you can deduct in 2019.  See Guide to Federal Tax Credit for Residential Solar PV

@cww111

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ganmad7
Level 1

Solar Tax Credit for 2019

Thank you. This has been the other question I have been pondering about. People often say it is placed in service, if it commissioned. But I am not sure where that comes from. From the document you shared, it is not clear how they define "installed". So, in my case, the panels were installed on the roof In December 2019 but commissioned in 2020. I am thinking I should be able to file in 2019. The difference is a few hundred dollars between 2019 and 2020. 

AmeliesUncle
Level 12

Solar Tax Credit for 2019

In order to claim the credit on your 2019 tax return, it must be "placed in service" in 2019.

 

"Placed in service" means it is ready and available to do its function. 

JohnB5677
Expert Alumni

Solar Tax Credit for 2019

 "property is considered to be placed in service when it is "first placed in a condition or state of readiness and availability for a specifically assigned function"

 

Definition of Placed in Service

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cww111
Level 1

Solar Tax Credit for 2019

When I entered all of the information the program would not let me take the deduction for 2019. Everything was installed in December of 2019 and placed in service on the 13th of December 2019.

DMarkM1
Expert Alumni

Solar Tax Credit for 2019

This is a non-refundable credit.  Did you have tax liability?  If there was no tax liability then the credit will not apply.  Also, was the solar improvement part of the construction of your main home?  If the solar was part of the construction of the home then the credit will not apply.   Here is a link with more information.

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