Solar Loan Interest Tax Deduction

[pscuba]

Below is the response from the Credit Union on my Solar Loan>>>>>>>>>
We file a UCC-1 on the property for the equipment (panels); it gets a little tricky when it comes to these.  In the event that something would go wrong, your structure does secure us to be paid back.  I know in some cases you can use the interest however, as I mentioned, since these are not real estate loans and are considered consumer, there is no supporting 1099 for interest that will be sent to the IRS or you. I strongly recommend that you speak to your tax consultant on this as they will have a better understanding whether you are able to use the interest or not.

[MargaretL · Accepted solution]

In general, consumer loan interest (personal loan) is not tax deductible. 

Only if the loan is secured by your home (such as home equity or other mortgage) the interest would be deductible as a home mortgage interest. 

Some lenders, when offering a mortgage loan, include a range of home improvements in the loan, such as solar panel systems.  Since the mortage is secured debt (by your home) the interest would be tax deductibe.

[westseek]

Is just the interest tax deductible?   And, can I include the cost of the solar panels ... three years ago?

[juneau123]

I purchased a home last year. The prior owner installed solar panels 5 just months prior (end of 2015) and did not uses the tax credit. The loan was transfered to me as part of the purchase of the home -which a 30 year loan. Documents were recorded at Title with a lien of some sort for this solar loan.  1) can I use the tax credit? 2) can I deduct 5% interest?

[claudimc1]

This answer is confusing.  The original question shows the lender stating that it is a consumer loan, but secured.  The answer suggests that personal loan interest is generally NOT deductible, but that secured loan interest can be.  So for a secured, personal loan specifically for solar panels, is the interest deductible or not?  And if so, where does it get entered in Turbo Tax?

[macpham]

My solar loan is secured. Where do I put the interest on my tax return. I itemize deductions.

[Critter-3]

If the solar was secured by a mortgage on your home then they will issued a 1098 showing the interest you paid on the mortgage for the year.   Personal loans secured by anything other than the home itself is not deductible.

The interest on a form 1098 is entered under the HOME section of the Deductions & Credits tab.