Can a solar company add in the cost of tree removal for tax credit

[pateccafoto]

A solar company said they can include foam insulation, energy efficient water heater and tree removal in the cost of solar so I can get tax credits for everything.  Is this correct?

[DS30]

Yes - You are allowed to include all costs necessary for the installation of your solar panels (including tree removal) as part of the cost basis in your home improvement.

[dabbott2019]

ok great.  for extra credit, i have 2 more questions:

1.  So by extension any tree trimming to improve panel performance and influence panel placement would also qualify, right?

2.  If total tree trimming bill was X and it included 3 major activities but only 1 was directly related to the panels and you don't have a breakout for that activity, should you include the entire bill or 1/3 (pro-rata) or some other portion?

[BMcCalpin]

Note that DS30 answered a different question than the one you asked. You asked about the solar credit and DS30 talked about adding the expense to the basis of your home.

The Residential Energy Efficient Property Credit (form 5695 - https://www.irs.gov/pub/irs-pdf/i5695.pdf) no longer applies to insulation and energy efficient water heaters, unless they are solar water heaters.

As for tree trimming for solar panels, the instructions for form 5695 say "Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home" (see link above). The tax credit is only for qualified solar electric property costs. A close reading of the law at Section 25D suggests that the expenses are allowed only for property that uses solar energy to generate electricity or is an integral part of such equipment (like the mounting hardware). In this case, tree trimming does not seem to qualify since it is not an integral part of the equipment that produces electricity from solar energy.

Yes, I see solar vendors make all sorts of claims about what expenses apply towards this credit; of course, they want to sell you services and are not tax experts.

TurboTax provides DIY tax services; that is, TurboTax depends on you to enter the data correctly, and it prepares the tax forms accordingly. If you want to make a claim for such a credit for foam insulation or tree trimming on the grounds that it can make your solar electricity system more efficient, I recommend that you find and use a tax professional who will guarantee your filing, i.e., will pay your penalties and interest if the IRS disputes your claim.

P.S. if you take this credit, you must reduce the basis in your home by the amount of the credit. See "You must reduce the basis of your home by the amount of any credit allowed" at https://www.irs.gov/pub/irs-pdf/i5695.pdf

[dabbott2019]

Thanks for your reply.  But my question was a follow-on to the original question, which WAS about solar credits: "Can a solar company add in the cost of tree removal for tax credit."  Your correction on the pivot-question-answer should really be directed to DS30 who first answered that question with this: "Yes - You are allowed to include all costs necessary for the installation of your solar panels (including tree removal) as part of the cost basis in your home improvement."

I have seen a number of other notes about tree removal costs being allowed as part of the tax credit (not tax basis) on the internet -- but wanted to see what TT had to say about tree trimming which I see as an extension of tree removal.

[BMcCalpin]

"Your correction on the pivot-question-answer should really be directed to DS30 who first answered that question with this" - as you can see, I did direct the comment to DS30 - "Note that DS30 answered a different question than the one you asked". What did you think that this meant?

And I did clearly answer your question about tree removal being part of the expenditures that qualify for the credit - "In this case, tree trimming does not seem to qualify since it is not an integral part of the equipment that produces electricity from solar energy." Did you read my answer?

[Bob208]

Trees

[LeonardS]

" Yes - You are allowed to include all costs necessary for the installation of your solar panels (including tree removal) as part of the cost basis in your home improvement". Ref:TurboTax

[dabbott2019]

Hi, Leonard.  Thanks for your reply!

But to be clear, there are two different questions in this thread -- and I think you were answering the other one.  The one I am interested in is the following:

Can I include in the total $s of solar credit for 2019 taxes, the cost of both (a) solar company's invoice for equipment and labor to install the system and (b) an arborist's invoice (about $3K) for major trimming of the surrounding tree area (but not tree removal).  (a) is for sure yes; the question is really about (b).  I understand tree removal as that's theoretically permanent.  The tree trimming is necessary to create better sun coverage for the panels at initial installation.  But will need to be performed every 4 years to gain back that coverage as the trees grow out again.

Please advise.

thx,

Doug

[raxler]

The tax code allows the credit for everything needed to generate the solar power.  That would probably include removal of any trees that prevent installation, but would not include removal of trees that block the sun.  Blocking the sun would hurt the efficiency of the panels, but not prevent them from working.  Imagine if the trees were smaller and weren't in the way.  Once they grew, they would block the sun light, but removing them would not allow any credit (for this example ignore the time lapse).

[DeanM15]

The removal of trees would not qualify for the credit.

In the instructions for Form 5695, Residential Energy Credits, it states that " Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. " It also says "Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property ". As rexler says above, you might be able to include the removal of trees that prevent installation, but not trees that block the sun.