SOLAR TAX CREDIT

[scialabbajr]

I purchased a solar system under a PPA. However, I made a lumpsum payment to purchase the system earlier than contracted. Can I deduct the lumpsum payment I made to complete the purchase?

[JeffreyR77]

It depends.  You enter on line 1 of Form  5695 the total cost of your system: the cost of the solar photovoltaics, or PV panels or PV cells used to power an attic fan (but not the fan itself); contractor labor costs for onsite preparation, assembly, or original installation, including permitting fees, inspection costs, and developer fees;  and any  remaining installation system equipment, including wiring, inverters, and mounting equipment.  

The total cost does not include any finance charges.  If your lumpsum payment included any finance charge, you will need to subtract that out from the amount your claim for the cost of your system.

The credit is a non refundable tax credit - meaning it reduces your tax liability.  If the credit is greater than your tax it isn't refundable, but can be carried over to next year.

This year the tax credit is 26% of the cost of your solar energy system. Solar Energy Credit - Form 5695

[scialabbajr]

Actually, although I appreciate your response and the information, you provided me with detail, if I purchase the system initially as I understand it. My question was related to purchasing with a PPA. I paid for the use of utility for 5 years and then purchased the system outright for a lumpsum payment of "$x". Can I claim the "x" on my taxes as a deduction? Thank you.   

[JeffreyR77]

No, the solar energy credit is only available for improvements purchased and installed in the calendar year. 

As your system is already installed, it would not qualify. 

The credits were available to the utility at the time the system was installed.

Home Improvements That Qualify for Energy Credits