Solar tax credit for rental property - "Residential" or "Non-residential credit"

[AmeliesUncle]

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@ShirlynW wrote:

1.  

      2, No, "Nonresidential energy property credit - IRC Section 48 are available only for certain improvements made to second homes, and the credits are never available when the 

        improvements are made to homes not used as a residence by the taxpayer.

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That is absolutely incorrect.  Have you even looked at Section 48?

[AmeliesUncle]

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@hqueue wrote:

I will be purchasing a new construction rental property (100% time rented out) in CA - where new builds are all required to be with solar now. Trying to figure out whether any solar credit will be eligible as part of Form 3468. 

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I haven't looked intently at the new rules for the business/rental side of the credit, but at first glance it looks like that starting in 2023 that credit is unfortunately reduced down to 6% (not 30% anymore).

[hqueue]

Thank you @AmeliesUncle. Do you have a link to the phase down schedule you are referring to? I found a source but looks like that one is saying 10% ITC credit for Date of Construction begins on or after 01/22/2022 and placed in service anytime thereafter. Thank you!

[Opus 17]

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@hqueue wrote:

Thank you @AmeliesUncle. Do you have a link to the phase down schedule you are referring to? I found a source but looks like that one is saying 10% ITC credit for Date of Construction begins on or after 01/22/2022 and placed in service anytime thereafter. Thank you!

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The code here says 6%.  But I am not familiar with this credit.

https://www.law.cornell.edu/uscode/text/26/48

[AmeliesUncle]

It looks like the base is 6% (10% in low income communities), but there could be conditions to increase that percentage.  But I have not deeply examined those changes yet.

[hqueue]

Thanks @AmeliesUncle! I see the language around 6% now.

@Oliflyer - do you remember if you were able to apply only up to 6% credit on the Section 48 / Form 3468 portion or perhaps has this percentage decreased recently? Thanks! 

[hqueue]

Also thank you @Opus 17 for your input!

Does anyone by chance know or have recommendations if there are any ad-hoc CPA consultation services available at all to hire a tax expert to look into a specific question like this and provide an opinion / conclusion? Perhaps is time to hire a formal CPA going forward...

[Opus 17]

@hqueue 

There also appears to be a commercial credit under section 179D.  I don’t know if section 48 or section 179D applies to residential real estate.  
https://www.energy.gov/eere/buildings/179d-commercial-buildings-energy-efficiency-tax-deduction

[Oliflyer]

I do not recall the 6%. I followed the recommendations of the Turbo Tax experts, you should call them, last year the support was included at no additional cost. 

[hqueue]

Thanks @Opus 17 - yeah, I honestly have been confused about the same thing. Whether these commercial credits are really for commercial buildings rather than residential.

[hqueue]

Most folks online seem to be referencing language on: Under Sec. 48(a)(5)(D), property that is eligible for the general business credit is tangible property for which depreciation is allowable. Solar panels installed for use in residential rental property meet this requirement.

[hqueue]

Thanks @Oliflyer for you response here!

[hqueue]

@Oliflyer - to be able to call TurboTax experts to ask these types of questions - do you know if you need to purchase the Online Live Assisted version to do that - is that the version you had? I only have experience using the Desktop CD version that they sell at Costco for self-file so far.

[Opus 17]

@hqueue 

In general, if you use TurboTax online, the standard fees only include customer support to assist with program problems. If you want any kind of tax assistance, you have to upgrade to Live or Full Service.  

If you are using the desktop software installed on your own computer from a CD or download, you are entitled to some tax assistance, because Live and Full Service are not available with the desktop product. However, the level of assistance that is available to desktop customers may not be as extensive as that offered in the Live or Full Service online products.

[smudge1]

I understand that I apply as residential for the solar tax credit but I am not sure how to figure out how much to put in for the tax credit? We got out solar system in 2022