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DIY Solar install TAX credit (on labor and not just gear)

Northbound

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Oct 3, 2020
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I could not find a satisfactory previous thread to answer this one, so I am creating a new one. Apologies if I missed it somehow.

Anywayes, I just got my permit for a grid tied roof installed 3.5kW solar system and picked up my solar gear from the warehouse.
The manager there did give me a tip that I can claim not only the cost of the gear but also the labor to the extend what a solar company would charge. I guess all I’d need is a quote for a comparable size system. If true, this would be huge news and return my investment in about 3 years, vs 6 years or so.
However, I searched the internet and could not find if this actually can be done. I looked at the TAX forms and there does not seem to be an answer there.
So I am currently assuming that it can be done, but if audited then this may or may not work.

Anyone has been there?

Thanks,
Rick
 
The labor costs "allowable to the onsite preparation, assembly, or original installation … and for piping or wiring to interconnect such property to the dwelling unit shall be taken into account for purposes of" calculating the qualified solar electric property expenditure QSEPE (Sec. 25D(e)(1)).

You cannot claim costs which were not incurred.
 
If you pay enough taxes to recoup the cost .... pay someone to do it.

Does it matter who you pay?
 
If you pay enough taxes to recoup the cost .... pay someone to do it.

Does it matter who you pay?
I can’t follow that logic. If i pay someone else, ROI is like 15 years away. for DIY it is 5 years. A nobrainer to me
 
I could not find a satisfactory previous thread to answer this one, so I am creating a new one. Apologies if I missed it somehow.

Anywayes, I just got my permit for a grid tied roof installed 3.5kW solar system and picked up my solar gear from the warehouse.
The manager there did give me a tip that I can claim not only the cost of the gear but also the labor to the extend what a solar company would charge. I guess all I’d need is a quote for a comparable size system. If true, this would be huge news and return my investment in about 3 years, vs 6 years or so.
However, I searched the internet and could not find if this actually can be done. I looked at the TAX forms and there does not seem to be an answer there.
So I am currently assuming that it can be done, but if audited then this may or may not work.

Anyone has been there?

Thanks,
Rick
My tax man (I'm a farmer and though I have a few degrees of stupid, I can't memorize tax code) states that according to Uncle Sams audit teams my personal labor has no value on this solar tax credit. While I can and do collect the deduction annually for equipment, my labor is not part of the tax credit. This might help, I did not read it after Mr. Corporate Accountant shared the news with me. https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics
 
I can’t follow that logic. If i pay someone else, ROI is like 15 years away. for DIY it is 5 years. A nobrainer to me
I was just asking how much of that labor cost you could get back with a tax credit.
 
If you are US based the proper form and instructions are here :


I haven’t reviewed the rules for a while but I believe the cost of tools for DIY is included.
 
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I was just asking how much of that labor cost you could get back with a tax credit.
I understand now, it’s a lot. Local installer quote as are around $12-13k and I hope to get away with $6.5-7k DIY. Thanks
 
If you are US based the proper form and instructions are here :


I haven’t reviewed the rules for a while but I believe the cost of tools for DIY is included.
Absolutely, tools are included, that is my interpretation as well, but the tools needed are only <$100 vs labor which is A LOT
 
100% of the labor of a professional install is applied to the federal tax credit. Look at my resources and you'll find this link. https://www.solarreviews.com/blog/federal-solar-tax-credit
But definitely shop around for a variety of quote to make sure you get the best price for your install. Don't overpay
I understand now, it’s a lot. Local installer quote as are around $12-13k and I hope to get away with $6.5-7k DIY. Thanks
Just make sure you get several quotes from different solar providers. You can find them locally or just go online for a quote and a local provider will get back to you promptly. You want to make sure you're comparing apples to apples so you don't overpay. http://www.TheHomePros.us/solar among others are excellent sources for pricing.
 
Old thread, but still seems best place to ask this.

If one was to form an LLC or other company, then pay that company for the labor (at reasonable market rates, shown by competitive quotes) would that payment then be an expense which one could get a 30% credit on?

Yes, this is almost certainly a question for tax experts :)

--J
 
Old thread, but still seems best place to ask this.

If one was to form an LLC or other company, then pay that company for the labor (at reasonable market rates, shown by competitive quotes) would that payment then be an expense which one could get a 30% credit on?

Yes, this is almost certainly a question for tax experts :)

--J
I don't think the LLC would be eligible for the tax credit. I believe this is a homeowner tax credit.
 
Homeowner pays the LLC to do the install. Homeowner works for the LLC. Now the homeowner has a receipt for the labor costs.

Of course the LLC now has the money, so one would need to figure out what to do with it, including paying wages back to the homeowner (but then taxed as income, so would only make any sense if their marginal tax rate was < 30% and then one would only net the difference between the credit amount and marginal tax rate). LLC income might stack straight on the homeowners income tax anyway (I forget which corporate forms are pass through entities).

Anyway, enough amateur tax accounting musings from me!
 
Homeowner pays the LLC to do the install. Homeowner works for the LLC. Now the homeowner has a receipt for the labor costs.

Of course the LLC now has the money, so one would need to figure out what to do with it, including paying wages back to the homeowner (but then taxed as income, so would only make any sense if their marginal tax rate was < 30% and then one would only net the difference between the credit amount and marginal tax rate). LLC income might stack straight on the homeowners income tax anyway (I forget which corporate forms are pass through entities).

Anyway, enough amateur tax accounting musings from me!
LLC is a lot of reports/paperwork, would look like a ruse without doing all the work to make it 100% legit
 
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