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Steph-B-
Returning Member

Solar Tax Credit For Multiple Borrowers

Hello all!

 

I understand that the solar credit can be split between two people if the home has multiple borrowers (i.e., mom and son-in-law).

However, I can't find whether one party can claim both portions of the credits (if the other party is okay with this) when they file their taxes, or are if they are only restricted to their half of the full credit.

 

The IRS publication doesn't go into multiple homeowners scenarios. 

 

Thank you!

 

5 Replies
Opus 17
Level 15

Solar Tax Credit For Multiple Borrowers

I think you misunderstand, you never get a double credit.  You only get a credit for what you pay for.  Suppose the solar system cost $10,000.  If both owners paid half the cost, then the two owners can each claim a 30% credit of $5000, equals $1500.  If one owner paid for the entire system, that person claims a credit for 30% of $10,000 = $3000 and the other owner claims no credit.   The maximum possible credit for a $10,000 system is $3000, the only question is who paid for the system and gets the credit.  The credit will never be $6000.  

 

So with two owners, if you can reasonably say that one owner paid for the entire system, then that owner claims the credit. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Steph-B-
Returning Member

Solar Tax Credit For Multiple Borrowers

Hi Opus 17, 

 

That is the answer I was looking for! 

 

In this scenario, the solar company requests that the mom's name has to be on the purchase agreement because she is the primary homeowner (the son is not on the deed), but the son-in-law will pay for the full solar expenses thus owning the solar under his name. He will end up claiming the 30% then.

 

Thank you for your help!

 

NCperson
Level 15

Solar Tax Credit For Multiple Borrowers

@Steph-B- - please review  the instructions for the solar credit (link below) on page 1.   It appears the son-in-law must live in the home to be eligible for the credit. 

 

Who Can Take the Credits
You may be able to take the credits if you made energy saving improvements to your home located in the United States in
2021. 


Home. A home is where you lived in 2021 and can include a house, houseboat, mobile home, cooperative apartment,
condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety
Standards

 

I caveot this answer in that Biden approved the Inflation Reduction Act today which has impacts on the solar credit.  I do not know if this new act changes who can claim the solar credit. 

 

https://www.irs.gov/pub/irs-pdf/i5695.pdf

 

 

 

Opus 17
Level 15

Solar Tax Credit For Multiple Borrowers

@NCperson is correct.  To claim the credit, the taxpayer must use the home as a residence.  

 

Interestingly, the taxpayer does not have to own the home, or even be a borrower on the mortgage to claim the credit.  But they must use the home as a residence (as well as pay for the system, of course).  It does not have to be their main residence or their only residence, but it must be "a" residence of the taxpayer who claims the credit.

 

This requirement is not changed or updated by the Inflation Reduction Act. 

*Answers are correct to the best of my ability at the time of posting but do not constitute legal or tax advice.*
Steph-B-
Returning Member

Solar Tax Credit For Multiple Borrowers

@NCperson @Opus 17  Sorry forgot to mention that the son-in-law does live in the same household, so he fulfills the residence qualification. 

Thank you for the reminder.

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