Solar credits for the year 2025

[jawckey]

I live in Arizona.

I have hired a solar company to add more panels and a battery to my existing system. They have installed the panels, linked them along with my old panels into the battery couple of weeks back. Basically the install is finished by the end of Oct 2025. However before it can be commissioned and connected to the local power suppliers, both the power company and city needs to inspect. Because their schedules are out of my hand and/or that of my solar company and since due to rush, they are very back-logged. There is some chance I run the risk of not getting powered on by end of 31st Dec 2025 and it may spill into first week of Jan 2026. I even considered this enhancement only because I stand to get abput 6 to 7K in tax rebates. Since the install is done already but if commissioning is delayed past 31st Dec., can I still claim the tax rebate in this year return?

I just hope so! Appreciate if you can clarify.

regards

[Opus 17 · Accepted solution]

https://www.irs.gov/newsroom/faqs-for-modification-of-sections-25c-25d-25e-30c-30d-45l-45w-and-179d-...

The Code says an expenditure is treated as occurring when installation is "completed."  The form 5695 instructions also say "completed". I tried to look for a more comprehensive definition of what "completed" means and I couldn't find one.

Usually, folks on this board will say that "completed" includes final inspection and turn-on.  However, it might be worth it to claim the credit even if the inspections aren't done, knowing that there could be a gray area if you are audited.  (For business credits, the term is "placed in service", which I would argue definitely includes being inspected and turned on.  But "placed in service" is not the language used for the residential credit.)

[AmeliesUncle]

Personally, I would claim the credit even if the inspections are not done.

In my opinion, your "installation" is completed.  Your system is generating energy that can be used in your home, regardless if inspectors have approved for you to turn it on.  And connecting to the grid has no bearing on whether it is completed or not (it just needs to generate electricity for your home).

[Opus 17]

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@AmeliesUncle wrote:

Personally, I would claim the credit even if the inspections are not done.

In my opinion, your "installation" is completed.  Your system is generating energy that can be used in your home, regardless if inspectors have approved for you to turn it on.  And connecting to the grid has no bearing on whether it is completed or not (it just needs to generate electricity for your home).

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As a point of clarification, I doubt very much that the system is generating power for the homeowner at this time.  If it can't be connected to the grid until the utility approves, the only way it could be generating power for the homeowner is if the homeowner is disconnected from the grid, and that can't really work except in a very few climates and requiring a ton (literally) of storage batteries. 

[AmeliesUncle]

I agree that it may not be powering the house now, but it they easily 'trigger' it because a battery system will have a "transfer switch" to disconnect from the grid (so they can use the system during power outages).  Even when there is grid power (such as now), they can hit a manual transfer switch (including a manual way to activate an automatic switch) to disconnect from the grid and use the solar panels until the battery is drained.   

[Opus 17]

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@AmeliesUncle wrote:

I agree that it may not be powering the house now, but it they easily 'trigger' it because a battery system will have a "transfer switch" to disconnect from the grid (so they can use the system during power outages).  Even when there is grid power (such as now), they can hit a manual transfer switch (including a manual way to activate an automatic switch) to disconnect from the grid and use the solar panels until the battery is drained.   

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Maybe if the transfer switch is manual, it might be allowed.  I had thought of that, but the problem is that if the homeowner is at work and the clouds come in, the a/c and fridge go out if there is no one at home to operate the manual transfer switch.  And I suspect that even if the transfer switch was manual, it will be locked and tagged out by the installer until the utility inspection.  An installation mistake could take down an entire neighborhood.

And this is largely irrelevant, since we are talking about "completion" instead of "in service" (for a residential system). 

[AmeliesUncle]

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@Opus 17 wrote:

Maybe if the transfer switch is manual, it might be allowed. 

And this is largely irrelevant, since we are talking about "completion" instead of "in service" (for a residential system). 

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Maybe they vary, but the automatic switches that I've seen have a manual option as well.

Yeah, you are right.  But it may be more support for any arguments from those who say it isn't "completed" until after the inspections.