Solar Tax Credit Form 5695

[DonLuis]

I looked into adding solar panels and a battery to my home.  To do the installation, due to the proximity of my gas meter  to my main electrical service panel, I need to either move my gas meter or move and upgrade my electrical panel.  I also need to remove my perfectly good light weight tile roof and replace it with asphalt shingles.  Can these necessary costs be included in the total cost of installing solar panels and a battery and qualify for the 30% tax credit?

[JotikaT2]

It depends.

The only costs that can be included are the costs to prepare the area for the actual solar panel installation.  So while you may need to replace your tile roof, you would not be able to claim the cost of the entire roof as the solar panels would not be installed on every section of your roof.  As far as the costs of upgrading your electrical panel, if it was necessary as part of the costs to install the solar panels, then it would be considered part of the preparation costs to install the solar panels.

Please see this link for more details as well as for directions on how to enter these costs in TurboTax.

[Opus 17]

The roof upgrades and moving other utilities are not allowed.  There was some confusion over roofing upgrades in the previous version of the code that was clarified when it was updated in 2021 (the Inflation Reduction Act, I believe).  Certain roofing system where the structural roof tile also produces electricity are allowed, but improvements to the roof itself that do not generate electricity (whether improvements to the shingles, the decking, or the trusses) are not allowed for the credit.  However, those costs are still additions to your home's cost basis, as may reduce your capital gains when you sell, so keep track.  

https://www.irs.gov/credits-deductions/residential-clean-energy-credit

As for the electrical panel, the law itself does not specify, but IRS notice 2013-70 says "

When calculating the § 25D credit, a taxpayer may include the expenditures for labor costs properly allocable to the onsite preparation, assembly, or original installation of the qualified property and for piping or wiring to interconnect the qualifying property to the home."  If the home can't be connected without upgrading the home itself, that seems to qualify, even though the home is not part of the clean energy generating system. 

[DonLuis]

Just to clarify, the only section of roof I need to replace is under the solar panel. It's called an inlay.  They will not install the panels without doing this modification.  The tile roof itself is perfectly fine and will easily last another 20 years.  So do you think I could claim the labor on this required modification?  Thanks!

[Opus 17]

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@DonLuis wrote:

Just to clarify, the only section of roof I need to replace is under the solar panel. It's called an inlay.  They will not install the panels without doing this modification.  The tile roof itself is perfectly fine and will easily last another 20 years.  So do you think I could claim the labor on this required modification?  Thanks!

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No. Modifications to the roof structure are not allowable for the credit, even if they are required to install the solar panels.  What you can claim is the solar panels (that generate clean energy) and other interconnected parts of the system that are also required to generate or use the clean energy (batteries, wiring, rectifiers, etc.).

Structural improvements to the roof are not allowed for the credit.  That part of the cost can be treated as an improvement to your home and may reduce your capital gains when you sell, but is not eligible for a credit.  

[Marylisaa]

Yes, the necessary costs for moving your gas meter, upgrading your electrical panel, and replacing your roof to accommodate the solar panels and battery installation can be included in the total cost. These expenses typically qualify for the 30% federal tax credit because they are directly related to the installation of the solar energy system. However, it's a good idea to consult with a tax professional to ensure all specific expenses qualify.