Solar Energy Credit For Rental Property

Solar hot water heaters solar electric equipment wind turbines and fuel cell property are examples of equipment eligible for the tax credit.

Solar energy credit for rental property. See line 12c later. 48 is more favorable. 48 provides for a solar energy tax credit for the installation of solar panels as part of the general business credit under sec. 25d does not allow a solar tax credit for the cost of installing solar panels for use in residential rental property sec.

48 a 3 emphasis added. The credit for solar illumination and solar energy property is reduced from 30 to 26 for property the construction of which begins after december 31 2019. 48 is more favorable. To claim the credit you must file irs form 5695 as part of your tax return.

On rental properties this is called the energy credit and it is part of the investment tax credit general business credit. There s no dollar limit on the credit for most types of property although the credit for fuel cells is capped at 500 per half kilowatt of power capacity. Both credits on your residence or rentals are 30 of the amount actually paid for 2019. 48 provides for a solar energy tax credit for the installation of solar panels as part of the general business credit under sec.

The credit for qualified fuel cell property is reduced from 30. The federal solar tax credit also known as the investment tax credit itc allows you to deduct 26 percent of the cost of installing a solar energy system from your federal taxes. Many rental property owners are not aware that these credits are available on their investment properties. The itc applies to both residential and commercial systems and there is no cap on its value.

You calculate the credit on the form and then enter the result on your 1040. Energy property is defined as any equipment which uses solar energy to generate electricity to a structure and equipment which uses solar energy to illuminate the inside of a structure sec. 48 is the commercial energy credit for energy property placed in service during the taxable year sec. 25d does not allow a solar tax credit for the cost of installing solar panels for use in residential rental property sec.

The residential renewable energy tax credit as the irs calls it can be an attractive way to save on the significant cost of installing solar panels or roofing an average sized residential solar.