Tax Breaks, Incentives, Write-offs?

I am looking at installing an All-In-One system at a short-term rental property. At first it might just be the AIO unit and batteries with no solar, and the intent would be to have purely as backup to power essentials (fridge, lights) when power goes out at the property which it does quite often.
The other year I bought a pellet stove that was eligible for a tax credit only to find out a strange little quirk in the rule was that you couldn't get the credit if the stove was for a rental property.

Does anybody know what incentives or credits are available (or not) on the purchase and installation of something like this? Or if this can be included for increasing the basis of the home and getting some kind of tax break there? It is likely I would purchase the AIO unit either new or maybe used, but batteries and solar panels I would likely purchase second-hand. And I would also be doing any installation and build work myself.

Thanks

You can't claim the Residential Clean Energy solar tax credit for installing solar power at rental properties you own unless you also live in the house for part of the year and use it as a rental when you're away.

• You'll have to reduce the credit for a vacation home or part-time rental property to reflect the time you're not there.
• If you live there for three months a year, for instance, you can only claim 25% of the credit. If the system cost $10,000, the 30% credit would be $3,000, and you could claim 25% of that, or $750.
  • $10,000 system cost x 0.30 (30% credit) = $3,000 full credit amount
  • $3,000 credit amount x 0.25 (25% of the year) = $750 partial credit amount

from here

That's "Residential" which must be owner-occupied.
And I think ONLY for principal residence, NOT a second home.

See what you can do with investment credit for Advanced Energy systems.



The residential credits now cover batteries even without PV, but only if larger than a certain size (3kW?).
NEC rules regarding listed ESS may kick in unless smaller than a certain size (1kW?)
So be sure of what can be permitted and approved by utility before buying.
On the bright side, tax deductions unlike rebates don't say anything about signed off permits.

OK, so it sounds like Residential Clean Energy credits are off the table.
But...maybe Advanced Energy Systems credit could apply. Probably looking at 3KW inverter and 7-15kw battery storage for this initial project.
The decision whether to actually do the project doesn't really hinge on credits or other tax incentives like basis adjustment or depreciation of the property. I just want to know so if I undertake it I know what qualifies. For instance, if I get some second-hand batteries from Battery Hookup and they cost $1200 where new ones would cost $2k, but new qualifies for $500 rebate, then it's $1200 used vs $1500 new...so new might actually make more sense.

For rental, you can look at the ITC and PTC for solar.

DIYrich said:

For rental, you can look at the ITC and PTC for solar.

Click to expand...

Thanks for the tip. I looked into both of those, and apparently you can get a 30% credit for solar, solar and battery or just battery alone. However, I will need to dig a little deeper into what they define as "used as a residence by the taxpayer". To me, this sounds like it may not be available for rental properties. I'm sure the exclusion is there to prevent some kind of fraud or abuse, but it would be nice to encourage the deployment of as much clean energy as possible even if through rental properties.

Nikg736 said:

Thanks for the tip. I looked into both of those, and apparently you can get a 30% credit for solar, solar and battery or just battery alone. However, I will need to dig a little deeper into what they define as "used as a residence by the taxpayer". To me, this sounds like it may not be available for rental properties. I'm sure the exclusion is there to prevent some kind of fraud or abuse, but it would be nice to encourage the deployment of as much clean energy as possible even if through rental properties.

Do Batteries Qualify for the Solar Tax Credit in the Inflation Reduction Act?

Do batteries qualify for solar tax credit? This article explains how the Inflation Reduction Act expands the tax credit for battery storage.

www.solar.com

Click to expand...

Don't confuse "residential solar" with "business solar". "Residential Solar" is for properties occupied by the Taxpayer. "business solar" is solar used in conjunction with the trade or business (rental property).