Current solar tax credits, eligible purchases and upgrades

[Sun_Dried_Toad]

I purchased and installed my system november of 2021. that purchase was a sort of "starter" setup. charge controller/inverter, 2440w solar array, and 4 FLA Trojan batteries.

we successfully filed and qualified for the rebate on all of the starter system. 26% of investment, credit offset on taxes... I believe.

I got this very basic system up and going, with plans of upgrading soon.

March of 2022 I purchased 4 more FLA batteries.

in the next two to three months I plan on purchasing 18 more PV panels and two fortress eFlex lithium batteries to replace the FLA.

The system upgrade will be put into service by the end of the year.

I had assumed that all upgrades could be claimed for whatever the current rebate is in 2022. upon a bit more research, it looks like there may not be a credit for upgrades. if there is a credit for upgrades, it may only apply to certain components.

can anyone with a better understanding of the solar tax credit give some insight?

 

[Hedges]

The following mentions a precedent that adding ESS later to a wind energy system qualified for credit, even though not installed at same time as the generation.
But you're planning to add PV, so you are actually making solar energy purchases this year.

https://www.nrel.gov/docs/fy18osti/70384.pdf

(Of course I'm not qualified to give legal or tax advice.)

 

[onokai]

You can get the federal tax credit for solar purchases in 2022 my tax man said. I got them in 2020 and 2021 and plan on a small one in 20222 (bought Tigo optimizers and tap and CCa units this spring). The have states are all different with rules and incentives (we do not know what state you reside in) That credit is getting smaller by a few points every year. They may even extend the Federal credits but I do not think they have yet?
I have no service contract with a utility but If I did I could get state credits. I think this year may be at 26% still ot bit less????Its on the cost of goods you bought in a given year for solar or at least thats what mine was as I did all work myself.

 

[Sun_Dried_Toad]

i am only talking about federal tax and credits. my state does not offer any solar tax credits.

does all solar equipment qualify, even when purchased as smaller upgrades to an already existing system?

something I had read the other day made it sound like the credit mainly applied to initial system purchase and any associated install cost in the original filing year. after that, it sounded like only batteries would qualify if purchased afterward. meaning additional panels, mounting and wiring would not qualify. it even made it sound like any additional charge controllers or investors would not qualify if purchased after the initial, functional solar system was bought and installed

 

[4thHorseman]

https://www.solar.com/learn/federal-solar-tax-credit/

Hope the above helps if nothing.

 

[Wet1]

I'm curious, does DIY install qualify for the federal solar tax credit? If so, just save your receipts and file the correct tax forms?

 

[timselectric]

I'm curious, does DIY install qualify for the federal solar tax credit? If so, just save your receipts and file the correct tax forms?

Yes

 

[Sun_Dried_Toad]

I'm curious, does DIY install qualify for the federal solar tax credit? If so, just save your receipts and file the correct tax forms?

yes. that is what I did for last year. we got a $2000 credit because of our solar system. we try not to give uncle Sam an interest free loan each year, so we tried to generate a tax deficit. our actual tax refund was $1,600. Prior to the solar system being factored in, we were supposed to owe $400.

sorry... rambling.

my wife and I did our own install. just kept the receipts for our charge controller, panels and batteries. filed those receipts, and boom! it offset our liability and somehow generated a refund.

I don't understand the actual, physical, cash refund, because it is supposed to be a "non-refundable" tax credit. our tax guy said it was because the credit gets applied first, to any debt owed, so the $1600 is considered overpayment in another tax category, that gets refunded after solar credit offsets it???

 

[Wet1]

yes. that is what I did for last year. we got a $2000 credit because of our solar system. we try not to give uncle Sam an interest free loan each year, so we tried to generate a tax deficit. our actual tax refund was $1,600. Prior to the solar system being factored in, we were supposed to owe $400.

sorry... rambling.

my wife and I did our own install. just kept the receipts for our charge controller, panels and batteries. filed those receipts, and boom! it offset our liability and somehow generated a refund.

I don't understand the actual, physical, cash refund, because it is supposed to be a "non-refundable" tax credit. our tax guy said it was because the credit gets applied first, to any debt owed, so the $1600 is considered overpayment in another tax category, that gets refunded after solar credit offsets it???

Thank you, I'll make sure I save all my receipts for this project.

 

[timselectric]

I don't understand the actual, physical, cash refund, because it is supposed to be a "non-refundable" tax credit

That just means that it must be applied towards your taxes due. It can't be received as cash.
For instance, if your taxes due for the year was $1500. And you had $2000 worth of tax credits. Your $1500 would be paid. And the other $500 would just not be counted. Because, you can't receive it as cash.
However, I believe that it can be carried over to the next year.

 

[Wet1]

That just means that it must be applied towards your taxes due. It can't be received as cash.
For instance, if your taxes due for the year was $1500. And you had $2000 worth of tax credits. Your $1500 would be paid. And the other $500 would just not be counted. Because, you can't receive it as cash.
However, I believe that it can be carried over to the next year.

Understood, I don't think I'll have an issue that! The tax man loves me...

 

[onokai]

Yes if you owe taxes you can get a credit right off the top from the 26% of this years purchases to your system
You can also carry it over to the next year if you do not use it all. I have a tax guy for my taxes as they are complex with two self owned business but I did carry over a credit a few years ago so I know it can be done (this is only for the federal stuff)
If you owe little to none on taxes these credits will not help you much
I owed a lot on tax so they all got used up and will again this year.

 

[8-ball]

California and I believe some other states are talking about charging a tax on those with solar because "only the rich can afford solar". So as I am doing my setup this year I was planning on taking advantage of the solar tax credit but now I am wondering if I should really do that because I am not sure I want the government knowing I have solar and there by "putting myself on their radar". What do you think? Claim credit or not. I live in California.

Link to an article about it.

No Solar Tax - CALPIRG

The California Public Utilities Commission’s proposal for a solar tax is unacceptable.

calpirg.org

 

[onokai]

PM sent 8 ball

 

[Sun_Dried_Toad]

California and I believe some other states are talking about charging a tax on those with solar because "only the rich can afford solar". So as I am doing my setup this year I was planning on taking advantage of the solar tax credit but now I am wondering if I should really do that because I am not sure I want the government knowing I have solar and there by "putting myself on their radar". What do you think? Claim credit or not. I live in California.

Link to an article about it.

No Solar Tax - CALPIRG

The California Public Utilities Commission’s proposal for a solar tax is unacceptable.

calpirg.org

wow
just wow.

I hate our politicians, and our crooked political machine, in general.

they tell us we have to go green. cutting off our nose, to spite our face on fossil fuels and energy independence. then, when someone dares to do what they tell us we have to do to "save the planet" they find a way to punish and discourage the very policy they pushed, passed and enforce.

I used to make biodiesel. I had a VW jetty that ran on it, and eventually modified it to run on unprocessed cooking oil. during my biodiesel time, they passed new tax laws that would punish anyone with HUGE tax fines, if found to be running homemade biodiesel.

I'm not even going to start in on the carbon footprint made by making all of these "hippie, green, fuels" let's just realize that for every gallon of corn ethanol or bio diesel made, a significant amount of petroleum fuel, lubricants or byproducts must be produced. I'm talking about seed to tank. water used, pesticides, land that could be food for something, instead used to cultivate ethanol, combines, tractors, trucks to haul, electricity to run processing plants, lubricats used in all stages of processing.

it's fuxking insulting.

 

[Hedges]

It's worse than you think.
We are also required to install rooftop solar (on new homes) in California.

 

[onokai]

(We are also required to install rooftop solar (on new homes) in California.)
Not in my area-this must be in LA area I hope

 

[Nobodybusiness]

It's worse than you think.
We are also required to install rooftop solar (on new homes) in California.

I feel sorry for you all out there.

Beautiful country but who can afford to live there?

Plus all the insane things they do like incentivize solar then penalize people who do it.

It’s nuts..

 

[8-ball]

(We are also required to install rooftop solar (on new homes) in California.)
Not in my area-this must be in LA area I hope

Actually all California. Newsome signed a bill that all “new” homes built after 2020 are required to have solar…I didn’t know it had to be rooftop though. That’s why any new subdivisions you may see all have some degree of solar. Not sure if there is a certain kw required per sq ft or what but yes it’s true.

 

[Hedges]

Well, maybe not technically "rooftop", I just meant PV for the house. And where not suitable, participation in community solar is an option.
Presumably kWh from community solar get accounted for same on your bill, even though not at same grid connection point, but I don't know.

Required amount "zero net energy" https://www.cpuc.ca.gov/ZNE/

For the objective of clean energy, community or utility scale grid tied PV would deliver several times the power for the same dollars.
If credits allocated to your bill just like net metering, this could let people buy in or sell off ownership, in whole or part, if their usage changed. So if you invested in replacing electric furnace with heatpump, for instance, you could release excess PV capacity for someone else to use.

The absurd thing, if proposed utility tariff adopted, is that the present law requires new homeowners to pay for solar (which generates power mostly while they're away at work) and the tariff gives them absolutely zero net credit for all power exported to the grid. Monthly $8/kW charge on installed capacity works out to $0.05/kWh for every kWh produced, and feed-in credit of 25% of retail works out to $0.05 kWh for every kWh exported to grid. So you're required to spend money on equipment and give the utility for free any power you don't use immediately. And pay the utility $0.05/kWh in cash for power you produce and use immediately.

To his credit, Newsom said the proposed tariff needs work and it did not get adopted. We're waiting to see what will.

 

[onokai]

My guess is that means you can have your energy bill (many smaller companies in Cal that buy power on paper) buy clean power. So that does not mean panels on every home-that PUC piece is a bit vague on details.
We have local outfit that buys power in greener lots and we get a small savings on power than from say PG&E the main producer in Nor-Cal
More solar is a good thing anyway you slice it.

 

[Hedges]

Not just "clean power".
There have been arguments about whether existing planned utility scale power qualifies, vs. community solar, tied to a new housing development.
Otherwise the state could just impose a $5000 tax on all new homes and hand the cash to PG&E for wholesale large PV plants.
Of course, cash-strapped first time buyers don't need the extra up-front (or added to mortgage) expense. Would rather pay for utilities to start. Investors with money to spare would like to pay for power plants.

 

[onokai]

If PG&E is involved we all loose-they are justa greedy stockholder company that gone belly up before.
If the solar singles come down in price maybe that would be the way to go for new homes as ppart of the roof cost

 

[Lost_One]

something I had read the other day made it sound like the credit mainly applied to initial system purchase and any associated install cost in the original filing year. after that, it sounded like only batteries would qualify if purchased afterward. meaning additional panels, mounting and wiring would not qualify. it even made it sound like any additional charge controllers or investors would not qualify if purchased after the initial, functional solar system was bought and installed

Hi SDT, It sounds like you are where I am at. I assume that you are referring to the federal tax credit. I have an existing grid-tie that I have had in service for about 9 years and I am looking to add panels, SCC and hybrid inverter w/ battery. Did you ever get more details on what can be eligible for tax credits?

Regards,

 

[onokai]

I would ask your tax man on that as you already have been at the tax relief trough 9 years ago.
My guess is anything new added is still good for the tax credit while that credit lasts in the next two years
let us know how this pans out so other can see