Residential Solar Energy Credits

[Dcsqatar]

Probably 'grasping at straws' here, but has any tug owner who is residing on their boat ever successfully claimed for Residential Energy Income Tax Credits? Reading the applicable IRS publication (5695), the solar energy investment credit provides a credit for 30% of the "costs for property that uses solar energy to generate electricity for use in your home located in the United States." Furthermore "Home" is defined as "where you lived in 2019 and can include a house, houseboat, …". Claiming a credit for solar water heating costs would seem to be less practical as "qualified solar water heating property costs are costs for property to heat water for use in your home located in the United States if at least half of the energy used by the solar water heating property for such purpose is derived from the sun."

Thanks in advance for anyone's insight!

 

[rheimb1]

You have to be tied into the public power grid and doing that from your boat would be impossible as your marina will not let you.

 

[scross]

I’m not sure being tied directly into the public power grid is a requirement for the solar energy credit. I’ve read up on it and I have not come across that Federal requirement. That said, our boat is connected to public power 7 of 12 months of the year in our driveway. The boat definitely qualifies as a second home per the IRS definitions and we take all the tax credits we can associated with having a second home. Ask your CPA for guidance about the solar tax credit.
PS: I thought the solar tax credit expired in 2019. Another reason to consult your CPA.

 

[Dcsqatar]

Thanks for the insight. The solar energy tax credit does not expire in the 2019 tax year, but it reduces from 30% to 26% (I think) in 2020 tax year then again in 2021 after which I believe it disappears. I am pretty sure that the energy credits apply only to your primary residence and therefore a boat used as a "second home" would not qualify.

 

[scross]

Doug, you are correct about the reduction, not elimination, of the federal solar energy credit in 2020 and 2021.
But the federal credit is available for second homes. Per IRS publication “2019 Instructions for Form 5695” published in Jan 2020 it states on page 2 under the paragraph “ Qualified solar electric property costs” that: “The home doesn’t have to be your main home.” The definitions of “home” and “main home” can be found on page 1.

https://www.irs.gov/pub/irs-pdf/i5695.pdf

Other searches on the web show HRBlock and TurboTax confirming that the solar tax credit can be used for a second home. See your CPA for details.

 

[Cutwater28GG]

whats the deduction on? the solar equipment or the purchase price of the whole second home?

 

[SJI Sailor]

IIUC it would be on the cost of the solar equipment and related labor to install it. Maybe RT could estimate that for us?

 

[scross]

It’s my understanding from reading through the IRS instructions that it would include all the hardware and installation costs. For us that would be the panel, controller and all wiring, breakers and fuses. Plus labor to install.
If you were really aggressive on your Federal tax returns (not that I would recommend or encourage that behavior) you could also try adding the cost of the all batteries tied to your solar system and any battery monitoring hardware.
Only your CPA knows for sure.....
Another PS: First, I am not a CPA or registered Tax Preparer. My beliefs should not be construed as advice or recommendations for your unique situation.
In reading the guidelines for the solar tax credit it seems to me that it does not cover the costs of ongoing maintenance of an existing solar panel system. So, it wouldn’t cover upgrading your batteries if you already had a solar system. The credit seems to me to be for new installations only. Completely unsure if it would cover the costs of improving an existing solar system component like moving to a larger panel/second panel or a installing a new more efficient controller in an existing system. Those types of issues are beyond my pay grade.

 

[Cutwater28GG]

shoot 30% off some lithium batteries is not to sniffed at!

 

[Dcsqatar]

I will pursue the solar energy tax credit on my boat as I bought it new in 2019, and post my results. Regarding energy efficiency improvements, there is another tax credit {Nonbusiness Energy Property Credit (Part II)} under which you may be able to take a credit equal to the sum of 10% of the amount paid or incurred for qualified energy efficiency improvements installed and paid for, or incurred, during 2019. This credit limited to $500 total over multiple tax years, and as I read it, it is applicable to only your "main home" which is defined as "generally the home where you live most of the time".