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How to claim the Federal 30% tax credit for installing solar

UPDATED FOR 2019! (2018 filing year)

It’s that time of year again—tax time! But this year is different, because this was the year you installed solar panels on your home (or qualifying property), and now you’re ready to get that big fat tax credit to take 30% right off the top of that expense. And we’re here to help guide you through the process!

And hey—if you’re reading this and haven’t yet installed solar, you only have a couple more years to get this sweet tax credit. 30% off the cost of a system is nothing to scoff at people, but the tax credit won’t be that big after the end of 2019… so what are you waiting for? Sign up to get personalized solar quotes from our expert partner installers.

We’ve included an example below of how to fill out the tax forms, and we’ve also included a section at the bottom of this post that answers some frequently asked questions about the process of claiming the credit.

We’ve prepared two posts to answer all your solar tax credit questions. Click on a button below to go to the relevant post:

KEEP IN MIND: We are solar guys, not tax guys. We do not give tax advice, and anything you read on this page is merely one example of how someone might act. Please consult a tax professional before filing.

Now then, let’s get down to it.

What you need to claim the tax credit

  • The receipts for your solar installation
  • IRS Form 1040 for 2017
  • IRS Form 5695 for 2017
  • Instructions for both those forms
  • A pencil
  • Some snacks to keep your energy up… something not too greasy, though… wouldn’t want to smudge the forms… pretzels are always a nice choice
  • Some water, maybe, if your mouth gets dry from the pretzels
  • A calculator

Fill out your Form 1040 as you normally would. Stop when you get down to line 53, and move to Form 5695. Write or type your name in the space provided.

How to fill out Form 5695

We chose “Example Exampleson,” who hails from my home state of Minnesota, dontcha know. He spent $25,000 to install a 5-kW solar panel system on his home, and entered that number in line 1 below:

IRS form 5695 lines 1-4

So what’s a qualified solar electric property cost? Here’s what the instructions for Form 5695 say:

Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home.

Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. The home does not have to be your main home.

All that is a fancy way of saying “Pretty much any cost related to installation and materials counts. Claim it.” Next, unless you also installed solar water heating equipment or a geothermal heat pump, move on to line 5. Follow the instructions to complete lines 5, 6, and 7:

IRS form 5695 lines 5-7

Skip to line 12 unless you installed fuel cell property (huh?), and enter in any credit you’re carrying over from a qualified energy property installation (like a previous solar installation) from the previous year. Then fill in line 13 with the total amount of credit from lines 6, 11, and 12. In Mr. Exampleson’s case, he has no prior-year credit to add, so he just puts the same $7,500 from line 6:

IRS form 5695 lines 12-13

Form 5695 Line 14 Worksheet – Reducing the credit

Line 14 is where it gets tricky. The thing about the solar tax credit is it isn’t “fully refundable,” meaning you can only take a credit for what you would have owed in taxes. This is different than other, fully refundable tax credits like the Child Tax Credit and the Health Coverage Tax Credit.

That’s why you use the worksheet below. You enter the total tax you owe before credits in line 1 of the worksheet, and the amounts of any fully refundable credits on lines 2 through 8.

Add up the total credits on line 9 and subtract to get your total tax liability. That number goes on line 10 of the worksheet and line 14 of Form 5695.

Luckily, you can carry over the unused credit to the next tax year, so if you can’t claim the whole credit on your 2018 taxes, you get to reduce your 2019 tax bill, too. A tax liability calculation worksheet is provided in the instructions for Form 5695. Here’s what it looks like for our friend, who has a total tax liability (listed on line 1 and line 11 below) of $4,600 this year:

IRS form 5695 instructions for line 14

Because Mr. Exampleson only owes $4,600 in taxes this year, that’s all the credit he can take now. He enters that number on lines 14 and 15 of Form 5695, and then enters $2,900, the difference between his total credit ($7,500) and the credit he can take this year ($4,600), into line 16.

Finally, he enters the amount from line 15 on Form 5695 into the box on line 53 of Form 1040.

That’s it! Mr Exampleson owes $0 taxes this year, and will get a further credit of $2,900 on his 2017 tax return. Now, check out the tax credit FAQ below. If you have any other questions, please enter them in the comments!

Frequent Form 5695 Questions and Considerations

  • Q: I got a rebate from my utility company for my solar panels. Do I calculate the 30% tax credit before or after the reduction from the rebate?
  • A: We get this question all the time, and here’s the best answer: You calculate the 30% federal tax credit based on the cost to you AFTER any rebates. For example, if your system cost $20,000 and you get a $5,000 rebate from the utility, your federal tax credit would be 30% of $15,000, or $4.500. Here’s the tricky part: if your state ALSO gives you a tax credit, you don’t need to worry about that amount to calculate your federal credit. Both state and federal tax credits are calculated based on the amount you paid, minus rebates or grants.

  • Q: Should I claim the tax credit if I partially paid (e.g., a deposit) in 2017 for an installation that won’t be completed until 2018?
  • A: No, the instructions for Form 5695 say “Costs are treated as being paid when the original installation of the item is completed,” so you can claim all the costs for your installation no matter when they were paid, but you have to wait to claim them in the year the installation takes place. Keep receipts!

  • Q: If I installed a solar panel system a few years ago and now I want to add new panels, can I claim the credit?
  • A: Yes! You can claim the credit for any new costs associated with the addition. You can’t go back and claim the credit for the previously-installed equipment. Hopefully you already claimed the credit for those costs back then.

  • Q: If I install solar and claim the tax credit, will I have to repay the credit to the government if I sell the house within a certain number of years?
  • A: No! If you install a solar panel system on a home you own, you can claim the whole credit and sell at any point after. Keep in mind this is only true for homeowners. The law is significantly more complex for commercial solar installations.

  • Q: Can I get a tax credit if I install solar panels on rental property I own?
  • A: If the property is a rental only, you cannot claim the tax credit. HOWEVER, if you own the property and maintain it as a residence for a certain portion of the year (i.e., you rent it out while you’re away), you can claim the credit for the portion of the year you spend there. For example, if you install $20,000 worth of solar panels on a home in Florida that you live in from November 1st to May 1st, and you rent that home during the summer, you are entitled to take 50% of the possible tax credit, or $3,000 (30% of $20,000 is $6,000, and 50% of that is $3,000).

  • Q: I just had a quote from a solar company. They informed me I needed a new roof to hold the solar array. Can I get 30% back off the roof and the solar, as it was an additional cost?
  • A: Let’s be clear again that we’re not tax experts, but it looks like the answer is yes. Early in this article, we quoted the instructions for Form 5695. Here that is again:

    No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed.

    What it looks like that sentence is saying is: a roof that is built to be able to hold a solar array counts as a structural component, and therefore counts as a cost of the project. Thanks, IRS!

Head on over to our “Frequently Asked Questions” post about the ITC:

Last modified: December 31, 2018

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138 thoughts on “How to claim the Federal 30% tax credit for installing solar

  1. Joey says:

    I own a home that my disabled daughter lives in (she receives SSA). I pay the electricity for the home and it’s in my name. Can I get the rebate for solar? She is a dependent on our taxes.

  2. Wong Lee says:

    I installed solar on house in 2017. 30% of the my solar was about 8200. In my 2017 tax return, I owed $3313 in tax, so I received $3313 solar rebate. I have about $4888 left for my solar rebate. Based on my estimate for the 2018 tax return, I will owe $5103 in tax. However, I will be getting only about $2800 in solar rebate. My question is: Why won’t I be getting the full remaining of my rebate, $4888?

  3. Carolyn says:

    We are about to install solar panels on our house and were told that the Federal Credit would be $12,648 and that it would be given to us when we filed our taxes. Will we really get that amount back along with our regular refund(which we usually get).

    1. Ben Zientara says:


      It all depends on your tax burden. If you usually get a refund, that just means you’ve overpaid taxes for that year. The solar tax credit can get you back all your taxes due, if you had taxes withheld through payroll deductions, up to the full amount of the amount on line 63 of form 1040 or the line on your tax form that says “This is your total tax“. If you made around the same this year as you did last year, your solar tax credit will probably be around whatever that amount was last year.

  4. Scott says:

    Getting different opinions on this… We purchased and EV this year and are schedule to get the $7500 credit (can’t be carried forward). Is it true that the solar credit supersedes the EV credit? We will not have enough tax liability for both this year, but it solar supersedes the EV, we could lose that credit because it doesn’t carry forward. My solar contractor is saying we can ignore the solar credit this year and take it all next year, but that doesn’t sound right.

    1. Ben Zientara says:

      Hi Scott-

      You should be fine taking both credits in the same year and carrying over the additional solar credit to a future year. Form 5695 (solar tax credit) limits the amount of the credit you can claim to your tax liability after other credits, including the EV credit. The instructions for line 14 of Form 5695 include a worksheet to do the calculation. The worksheet asks you to subtract the EV tax credit (among others) from your tax before credits (line 47 of Form 1040), and considers the EV tax credit in its calculations, meaning that your tax liability is reduced by that amount first, and your available solar tax credit will equal whatever tax liability exists after.

      Our usual disclaimer: as always, don’t take our word for it. Please talk to a licensed financial planner or tax accountant before making any financial decisions.

  5. Jake says:

    I am the owner, but my mom lives here half the year. My liability is very low but her’s is much bigger. The company says that as long as she is a co borrower on the loan, she will be able to use the credit. Is this correct?

  6. Anonymous says:

    what happens if I want to rent my second house next year after I claim solar tax credit for the year of 2018

    1. Ben Zientara says:

      That’s a really good question, and I think it’s one that needs a tax expert’s help. My impression is that it would be allowed. As long as you can take the full tax credit in year 1 and the house on which you installed panels was your primary residence at the time of installation, it should be fine. Not sure of the reason you’d want to install solar on a home for which you wouldn’t be seeing the benefits, unless you plan to offer low electricity bills as an amenity and extract higher rent payments in exchange, but you do you.

  7. Tim says:

    Hi: We pre-paid a 20-year solar lease for panels on our residence in 2011. This year, we bought out the system from our leaseholder and now own it ourselves. Can we claim the tax credit for purchasing this system?

    1. Ben Zientara says:


      That is a really good question, and to be honest, I don’t have an answer for you. I suspect that because the installer was able to claim the ITC when they installed the system for you, you won’t be able to claim it as well for the same system. Definitely talk to an attorney or accountant for further guidance. I hope you got a good deal on that lease buyout!


  8. Al Cardozo says:

    I got solar panels last year for $33000 the federal solar credit is $9900, but I’m a retire and pay no tax, and when I did the tax this year,got $0 , what can I do to get it ?

    1. Ben Zientara says:


      The only way you can claim the tax credit is to have enough income to owe taxes. If you have a retirement account, that might mean withdrawing more than you plan one year to incur taxes that you can then offset, but really, that might just be robbing Peter to pay Paul, so to speak. Check with a financial advisor or attorney for the best course of action.

  9. George Hamlin says:

    I live in a senior HOA community. We have a clubhouse and want solar. I am told that we can’t get a solar PPA. Is the PPA not available to non- profit organizations.

  10. Jesse Heller says:

    If I have a solar energy tax credit carried over form 2019 (30%) to 2020(26%) will that also reduce the % of the remaining tax credit?

  11. Howard Thompson says:

    I own two houses. My primary residence is in OR and the second house (which is not rented, only used for my entertainment) is in WA. May I claim the solar credits if I put in solar installations at both houses.

  12. MrB says:

    I paid $3/watt for a 6.6kw system that was installed last year. I took the credit. It turns out that the system that was installed was only 5.06kw, so I got a refund. Do I need to pay back part of the credit I took?

    1. Ben Zientara says:

      Hey MrB-

      That tax credit was based on the costs you paid, so whether you thought you got a 6.6-kW system or a 5.06-kW system, you paid $19,800, right? That means you get the 30% credit of $5,940.

      Now, if in fact you paid for only 5.06-kW @$3/watt, or $15,180, then yeah, you took the wrong amount for the credit and should probably contact an accountant about filing an amended return.

  13. Jackey says:

    I got solar Pannels installed last year at $20K. After filing my taxes on turbo tax it stated I was only receiving $200 and I would revive just over $5k next year. Why didn’t I received the entire amount? I had plan to put that money back in to my solar loan to keep the payments low.

  14. Neal says:

    I purchased solar panels in 2017. The total cost of the project was $77,278. We took out a $75,000 loan from the credit union to pay for the project. We paid the balance out of our personal funds. From the loan proceeds, $70,500 was paid in installments directly to the contractor. The balance of the loan proceeds was used to buy down the interest rate on our loan and went directly to the credit union. The contractor is an approved solar company in California. Do I need to reduce the amount of my solar credit by the amount of the interest rate buy down or can I claim the entire contract amount?

  15. Ryan says:

    I was told by the solar installers that I could roll over my credit to the solar loan. Is this possible or was I lied to?

    1. Ben Zientara says:

      Not sure exactly what “roll over” means in this context, but it’s true that you can pay down the loan by the amount of your tax credit. In fact, many solar loan providers require you to pay down the loan within 18 months based on the expected tax credit. This type of “balloon payment” is used to secure lower interest rates and low monthly payments on solar loans.

  16. J says:

    Just to clarify because I receive a refund come tax season and get money back that wouldn’t disqualify me from claiming ITC. The ITC is based on the total money I have paid to the govt correct?

    1. Ben Zientara says:

      That’s correct. The ITC can offset your tax bill up to the total amount you’ve paid in for income tax.

  17. Mary says:

    I purchased solar panels for my home & took the appropriate tax credit. 2 yrs later I need to replace the roof. The panels need to be removed, a new roof put on and then the panels replaced. Does any of that (like the new roof) qualify for a tax credit? Thank you

    1. Ben Zientara says:

      Hi, Mary-

      Unfortunately, I don’t think any of the expenses you incur will be eligible for the tax credit. Your best bet is to contact a tax attorney to get some further guidance.

  18. Rick says:

    Can you install a solar system under one contract and get the federal credit of 30 percent and then buy a solar battery to add to the system in 2018 under a different contract and receive the federal tax credit for the cost of the solar battery and it’s install in 2018?

    1. Ben Zientara says:

      Rick, that’s an excellent question, and it appears that the answer might be yes, given that the battery(-ies) you add are set up to ONLY charge from solar power. In fact, this question has only just been addressed in a private letter from the IRS to a married couple who had exactly the same query as you.

      Here’s a great article about it:

  19. James Cushmano says:

    Does anyone know if there is a maximum rate per watt that is generally accepted by the IRS for residential and commercial installations. I have a complex tracker installation proposed that is coming in at over $6.00 per watt and I want to make sure I can capture the ITC.

  20. Ken says:

    does a solar carport qualify for the 30 percent tax rebate?It was cheaper to do that way(self installed )than buying the heavy ground racking poles?

    1. Ben Zientara says:

      I believe as long as it provides power for your primary residence, the answer is yes. Talk to an accountant to be absolutely sure, but that should be how it works.

  21. Anonymous says:

    It’s a question regarding windows apropriate on this questenire ?

  22. Greg says:

    I have heard that a solar Tracking system is not covered for 30% federal tax credit ??? Can someone clarify this for me…… I’m thinking of getting a tracking system……Need PROOF —- DOCUMENTATION thanks

  23. Hugh says:

    Do solar shingles instead of solar panels qualify for the 30% tax credit?

  24. Andy says:

    Do I have to claim my ITC the year of installed? or can I claim later like when I sale the house?

    1. Ben Zientara says:

      Year of install, but you can roll over unused credit, so keep filling out Form 5695 until you have the tax basis to claim the credit.

  25. Steve C says:

    I need some tools – a drill and a ladder – to install my solar array – do these expenses qualify for the 30% tax credit

  26. Ms. Mullinax says:

    I have been contacted by 3 solar panel co’s. Two of them said I do not qualify because I am on a fixed income ( retired 65 ). They did not even ask if I could pay for cost of the panels out of IRAQ for example. I feel that again senior’s are being discriminated against. What is your understanding on this subject?

  27. Alfredo says:

    I am getting 7.48 kW solar panels, which I will pay each month for 10 years, now they have 23,936 dollars and the menus 7,180.80 which is 16,755.20 are they solar company going to want to pay that to them once I get the 7,180 dollars back. I don’t know if I will get all that back. Do not need to get another solar company or is this standard business? We

  28. Chris says:

    If I purchase a solar system in 2017 from one company and purchase batteries from another company later in the year, can i claim the tax credit for both those purchases or does it have to come from a single installation/vendor?

  29. Anonymous says:

    I did my own installation. Can I deduct some reasonable labour costs for it?Does the statement “Include any labor costs properly allocable to the onsite preparation, assembly, or original installation of the residential energy efficient property and for piping or wiring to interconnect such property to the home.”

  30. Dale says:

    I had solar installed on my Oregon home and still have $1,500 credit to claim. I moved out of Oregon so I do not have any Oregon income tax to file. How can I claim the balance of my credit?

  31. Lily says:

    Hi. I’ve been searching for this question/answer everywhere but have yet to find out. We purchased a solar system for our home (that we own and live in) and we are paying it off in installments over the course of 10 years. After that, it’s ours to keep. As far as I know, this is not a leased solar system, we own it but it’s just being paid off (like a car). Are we able to claim the tax credit now? Or do we have to wait until the system is fully paid off? Thank you!

    1. Ben Zientara says:


      It sounds like what you have is a solar loan. I’m not sure if you went through a bank or your installer for the initial capital, but unless there is something shady going on, you should be able to take the tax credit for the full amount. Definitely ask a tax professional to look over your paperwork to be sure.

  32. john says:

    I installed solar panels jan 2016 on a 20 year lease purchase agreement with the solar company. I did not pay anything up front to the solar company . My monthly cost to them was 10 cents per kwh for the whole year which added up to $1026.20. Do I qualify for the 30% tax credit on that amount?

    1. Ben Zientara says:

      Hi, John-

      Sadly no. The company that installed and owns the panels gets the tax credit for the installation. The tax credit is part of the reason they can sell you electricity so cheaply.

  33. T. Holm says:

    We installed solar in 2016 and expected a 30% tax credit of a little more than $11,000. Now that I am doing our taxes, it appears that we lose our $3,000 Child Tax Credit due to the Residential Energy Efficient Property Credit. (The Child Tax Credit is reduced by certain other credits including the Residential Energy Efficient Property Credit.) And since we cannot take all of the Residential Energy Efficient Property Credit this year and need to carry over to 2017, we will lose our Credit Tax Credit next year also. So the $11,000 tax credit really nets only a $5,000 gain and puts the ROI on our solar installation many more years out that we anticipated. The Child Tax Credit is such a common tax credit, I am surprised that I have not heard this before. Can anyone confirm this happened to them also?

    1. Ben Zientara says:


      Again, we’re not tax experts, but what it looks like to us is you’d be reducing the amount of your Residential Energy Efficient Property Credit by the amount of the fully refundable credits you’re already taking.

      On line 14 of form 5695, you enter an amount for the Residential Energy Efficient Property Credit Limit Worksheet that’s been reduced by the other credits you take (including the child tax credit). In this case, it’s the Residential Energy Efficient Property Credit that’s being reduced. The other credits should be unaffected. Of course this means you’ll have to carry over the remainder of your Residential Energy Efficient Property Credit until next year.

      That’s our understanding. Please consult a tax professional to confirm or deny.

  34. Anonymous says:

    if i put panels up in 2016, but my taxes owed for that year is only a few hundred dollars can i wait and claim the credit the following two years? My understanding is it is good for two years.

    1. Ben Zientara says:

      Yes- From what we’ve heard from trusted sources, you can take the ITC for as many years as necessary to recoup the full cost. Financially speaking, money now is better than money later, so we hope you’ll be able to take it soon!

  35. Henry says:

    If I owe back taxes and I am on an IRS payment plan, can the tax credit be applied to the overdue tax? I won’t owe taxes because of 2 child credits the yes I install solar on my house.

  36. Jojo says:

    I bought a property this year (2016) with the solar on it(19 panels in total) and the balance of the loan was transferred to my name; The previous owner had the solar installed backed in 2014; Can I take the Federal credit for the remaining balance since I am continuing the payment of it until 2024?

    1. Ben Zientara says:

      Unfortunately, no. The tax credit is claimed in the year of installation. I hope the loan payments aren’t too much more than the electricity savings with solar!


  37. bill says:

    In considering placing photovoltaics on an owner occupied three family dwelling, my tax preparer (who has no experience with solar) informs me that i’d only be eligible for a third of the 30% ITC, based upon my use/occupancy percentage of the dwelling. i disagree. can you tell me which is correct, and provide any cites or references, please, since this is a tax issue. Anything you can do to help me with this question would be greatly appreciated.

  38. Scott says:

    What is the company that installs my panels offers be a rebate. For instances, I right them a check for $20,000 for and they give me a $3,000 rebate. So I only paid $17,000 total. Do I report $20,000 to IRS or $17,000. Thank you,Scott

  39. Anonymous says:

    If I rent a property and add solar power to my energy mix with my own money, can I as a renter, claim 30% tax credits?

  40. Anonymous says:

    I am a new solar consultant. I have been on the job for about two months now. I understand you are not a tax professional, however I’m looking for you to confirm something for me.

  41. Turner says:

    If I pay for a system to be installed on my parent’s home (I don’t own it – they do), do I still qualify for the tax credit as the purchaser of the system?

  42. Linda says:

    The way this is being worded is confusing a lot of people. When people are saying “what if I don’t anything at the end of the year?”, they are meaning they paid their taxes all year but at the end of the year, they don’t owe any more taxes. Or maybe they overpaid and got a refund. What you have differentiate for all of us, is do we get to claim the tax credit against all the taxes we paid throughout the year. If I paid $5000 through deductions in my paychecks all year, then ended up with a $1000 refund from overpaying….will I be able to claim the tax credit against the remaining $4000 that I paid in taxes? And if I do, will I get a $5000 refund check because of this?

    1. Ben Zientara says:

      Linda, the answer is YES! If you’ve paid taxes through deductions from your paycheck, you’ll get that money back as a refund if your solar tax credit meets or exceeds that amount.

  43. john says:

    its in maryland, ohep program or liheap. the contractor is standard energy solutions who contracts gac services to perform the hvac

  44. john says:

    my system was installed by a weatherization program at no cost to me, am i still eligible?

    1. Ben Zientara says:

      That’s a good question, and we don’t have a perfect answer. My initial impression is no; with no cost, there is no expense to be credited on your Federal taxes. I also suspect that the state program was administered by a private entity that was likely able to take the credit themselves. Can you please tell me more about the program?

  45. Keno says:

    My question is can I sell my solar tax credits? I can’t take advantage of them. Who would I sell them to? I live in Arizonia.

    1. Ben Zientara says:

      Hi Keno-

      That would be great! Unfortunately, tax credits are not a tradeable asset. There is a solar incentive called Solar Renewable Energy Certificates that can be sold to utility companies in some states (not AZ, unfortunately), to make money on solar. The best bet if you can’t take advantage of the tax credits is to lease the panels or buy the energy under a power-purchase agreement.

  46. Anonymous says:

    I cannot find anything on the IRS website that confirms that you cannot get the tax credit for a rental property. Where is your information from? We have a beach house that is available to rent year round, but it is only essentially rented for 3 months a year. However, we adhere to the 2 week rule and only use the house for those weeks of the year. We want to put in solar, but not without the tax credit. The installer says that everyone in the beach community gets the credit regardless of rental or not.

    1. Ben Zientara says:

      Hi there-

      The IRS is pretty clear about this in a few places, but perhaps the most clear is in IRS Bulletin 2013-47, in which is written: “a taxpayer may not claim the §25D (energy property) credit for expenditures for improvements made to an investment property, such as rental property, that is not also used as a residence by the taxpayer.”

      Furthermore, if you do use the rental property as a residence for part of the year, the §25D credit can be claimed, but it must be adjusted to reflect the % of time you actually use the home as a residence. You’d have to speak to an attorney about whether that qualifies you for 75% of the credit (the 9 months the home is unrented, or for 5.7% of the credit (the 3 weeks you actually reside there).

  47. Tim says:

    I received a bid for $52,000 for my warehouse. I have found that I can purchase all the equipment needed for around $25,000. I am now going to have my guys do it and have an electrician hook it up. Can I charge myself the additional hours it would take to install that system and get the tax credit for it?

  48. Jake says:

    Ben, New York just launched a community solar program. Our company would like to sell portions of a large solar array to commercial businesses. Obviously, the businesses will want to utilize the 30% ITC and accelerated depreciation. Do you know if that is allowable under the tax code? Can multiple businesses take their portion of the 30% ITC, depending on how much of the system they own? Any resources or help would be greatly appreciated.

    1. Ben Zientara says:

      Hi Jake-

      I’m not sure exactly how it would work to sell portions of a solar array to businesses directly, because most large community solar installations are set up to be owned by a single entity, which then claims the ITC itself (as sole owner) and sells either the electricity or the leases the panels to its “subscribers.”

      If instead your company is thinking of acting only as an installer—building multiple discrete systems on a single piece of land, each with individual owners, I don’t see why those owners couldn’t take the ITC and accelerated depreciation. That situation would, however, preclude your company from also taking the ITC. Can’t both get the tax credit for the same system.

  49. Janice Hardy says:

    We were told when we bought our solar panels in April of 2015 that we would get a tax credit of $6000 to be applied as the down payment for the loan we took out. we informed them that we did not have to pay income tax or even file because we had no working income and our income was low. Now that it is time to apply for the tax credit, I don’t think we qualify for the rebate. I think we have been snuckered . This is in the contract, which only my husband signed. My husband passed away suddenly on January 8, 2015, which means that my income has been drastically reduced. This is really discriminating on older people and they should be aware of it. Is there anything I can do or help I can get in these circumstances? There is no way that I will have to pay income tax next year. P{

  50. Niamh says:

    I have a tax preparer telling me that I’m not eligible for the solar rebate because I don’t owe taxes, I’m getting a refund. Please correct me if I’m misunderstanding several response on this forum, that I should still get it. Le’t say solar cost 20k and 30% is 6k. If I’m getting a refund of 2k without the solar credit, my refund should now be 8k?

    1. Ben Zientara says:

      Hi, Niamh-

      Your refund would only be $8k if you had a tax burden of $8k. The solar ITC only entitles you to a refund of money you actually owe—in other words, it’s not a fully-refundable tax credit. If your tax burden is $2k or less, the $2k is the best you can get. If your income goes up next year, you can file for the ITC again.

  51. Nate says:

    I’m still a little confused about whether or not I’ll see the credit for my system. I have a standard W2 type employment where they take out state and federal taxes every paycheck. When I do my taxes every year, I typically get back a refund for both state and fed (which basically means I am overpaying them a bit throughout the year). So if I am likely going to get money refunded back to me when I file my 2016 taxes, does that mean that applying for my credit for 2016 won’t net me any tangible results?

    1. Ben Zientara says:

      Not at all. Presumably, if you have income, you pay taxes. Unless yo make very little or get a large Earned Income Tax Credit, the refund you get every year is only a small portion of your total tax. The government usually keeps what you owe and refunds you the extra. With the solar tax credit, you’ll get everything back (everything that isn’t Social Security and Medicare tax). Your rebate should be huge!

      Enjoy it.

  52. Steve says:

    Here are two questions for you. I live in NY and last year installed a solar system. I received a grant (rebate) from NYSERDA. I know that rebates from ultilities are not counted in the cost for determining the federal tax credit, but this is money recovered from the utilities and administered through the state, so can I count this as part of the original cost of the system. Second question: If I claim the state tax credit and receive a refund this year, will I have to pay federal taxes on the refund next year. I itemize deductions and deduct my state taxes.

  53. A solar salesman told me that although the federal tax credit for residential solar does not expire until the end of 2016, only a certain number of homes are allowed on this program, and that number will be reached “within a couple of months.” Is this true, or was it a sales lie?

    1. Ben Zientara says:

      Hi, Doug-

      If that’s what you were told, that’s a lie. The Federal 30% tax credit has been extended through the end of 2019, and there is no cap on the number of homes that can participate. Some state tax credit and rebate programs fill up quickly, but the federal solar investment tax credit (ITC) is for everyone, until the end. Check out the page we have for your state to learn more abut the incentives available to you.

  54. Rosaly says:

    Thank you Ben Zientara for your answer. Base on the agreement the purchase option minimum cash purchase price at this year( $28,687) and for this next year (2017) cost is $25,370. As of now they are charging us $ 0.283 per kwh and 10% increase every year. Please let me know if purchase option if better deal or not. Thank you in advance.

  55. Rosaly says:

    We bought a house back 2014 and it has a solar on it. The previous owner had a lease solar agreement started back 2012 and the lease agreement is transferred to me and I am planning to buy the solar instead of leasing it. Am I still able to file the tax credit?

    1. Ben Zientara says:

      That is a really good question. We have an answer you’re not gonna like. The reason solar leasing is financially viable for the leasing companies is they can claim their own 30% tax credit, because when they install a leased system, they’re the owners. So when they sell the system to the homeowner after a few years, they’re basically just selling their interest in an investment vehicle—after they get the big up-front benefits

      That said, how much are they offering to sell it to you for? Depending on the price, it could still be a very good investment for you. We can tell you whether it’s a good deal.

  56. Cheryl Brown says:

    I see many questions asked however they have no reply.. My question is if I sell my solar unit to someone else and it is professionally installed, does the new buyer qualify for the tax credit?

    1. Ben Zientara says:

      Hi Cheryl-

      The tax credit only applies to the first owner of a new solar panel installation. Were you thinking of selling yours secondhand to someone?

  57. Matt Jenkins says:

    oops! Rose, you wouldn’t have to apply for the ITC, because the full benefit of the tax credit, whether you pay taxes at all, will be given to you on day one. In other words, the price you pay for your prepaid PPA is about the same price someone would realize AFTER they had paid the FULL price, then chased down the tax credits, as long as the company providing the prepaid is offering a competitive rate. In other words, the purchase and the PPA got married and had a baby, the Prepaid PPA.

  58. Rose says:

    We are in the process of re-roofing just for the solar installation. For the solar, we choose the pre-paid (aka lease) option but not the owning option? Do we still qualify for the tax credit in your example?

  59. Mau Le says:

    W2 Federal Tax Wilthhoding $7,500.00. In case no solar, I and the government make even. Otherwise my solar costs $25,000.00, will the government refunds me $7,500?

    1. Ben Zientara says:

      Tax liability is what you actually owe on your taxes after deductions, and it usually isn’t the same as withholding, unless you can manage to plan your withholding perfectly. If you spend $25,000 on solar, you are entitled to a credit of $7,500, and if your tax liability is exactly $7,500 and you’ve had $7,500 withheld from your paychecks, you’ll get every penny back as a refund.

  60. Laurie says:

    How do you get the federal tax credit if you only paid $1 for the system?

  61. Deanna says:

    Our Solar Tax Credit for 2015 is $8k and our carryover to 2016 is $700. I want to know if I can carryover some of the $8k to 2016? For example, can I claim $5k for 2015 and carryover $3700 to 2016?????

  62. Tami says:

    I bought a house with solar panels on it. I had to take a separate loan to pay for the solar panels . Can I take the tax credit for the $18,000 loan I took on the solar panels of my new home if the original owner already took the credit when they bought the panels new, even though they didn’t pay them off

  63. Kathy from Las Vegas NV says:

    Your webpage is really great. I am an experienced tax preparer, not licensed, I prepare returns for my family & friends, I’ve have for over 7 years. I benefited from the examples & questions & answers, Thank you so much. I appreciate these types of informative sites.

  64. Nade says:

    I have added a battery backup system to my solar panels with new inverters that will take the system off grid in case of power failour and have it function as a fully off grid solar system. However the system requires or is configured normally to have a gas generator as part of the system to help maintain the solar batteries and prevent overdepletion of batteries in use, etc.. Can I claim the cost of the generator and its installation for tax credit. Thank you.

  65. Randy says:

    The 2015 form 5695 has 2 pages. I am only going to utilize page 1. Do i have to attach p2 if not used when filing?

  66. Alan says:

    On Jan 9, 2016, Ben stated “The Federal credit can be taken for only two years. If you aren’t able to claim the full credit in two years, the rest goes away.” This is not true. A look at the form and instructions makes no mention of carryforward limits. If you examine lines 12 – 15, you will see that that Form 5695 provides for perpetual carryforward. But don’t take my word for it; have a look here:

  67. Tony says:

    Can I take a solar tax credit on my commercial rental building?

  68. Rick says:

    Our install was completed and inspected by the City building inspector on December 28, 2015, but it took about 10 days for our Utility company to approve it and give us the go ahead to turn on the system. Can we claim the tax credit for 2015 or do we have to wait until we file our 2016 taxes to claim it?

    1. Ben Zientara says:

      Hey Rick-

      You can absolutely claim the credit. The installation was completed in 2015, and you likely have receipts and permits and work orders to prove it. Congratulations on your new system!

  69. Patricia says:

    If I only receive a portion of my tax credit this year and the rest rolls over, does the remainder each year continue to rollover until you have receive the total due to you? I have read that it’s is only 2 years then I read 5 years.

    1. Ben Zientara says:

      The Federal credit can be taken for only two years. If you aren’t able to claim the full credit in two years, the rest goes away. Some states allow their own tax credits to continue for as many as 6 years.

  70. Victoria says:

    What if the government doesn’t pay the money? Do the solar panel companies have the right to come after us for it?

  71. Tom says:

    How do you save on the Solar Panels if you don’t get the State and Federal Tax credits.

  72. Dave says:

    We own a vacation home on Cape Cod that we rent by the week throughout the year. We spend two week there as vacation. Do we qualify for any portion of Credit? Getting conflicting opinions from Solar ‘experts’?

  73. David says:

    Getting various opinions on the following, We owWe own a ‘vacation’ home on Cape Cod that is rented most of the year (by the week).

  74. TB says:

    Two different types of questions. First is a person eligible for a solar tax rebate if the solar panels (power) they acquire is within a larger community solar array? 2nd Question. If I “donate” the solar energy credit to a charitable organization, such as a church or other 501 c (3), are you still eligible for a solar energy rebate from your taxes?

  75. Wanted to know says:

    Um I know this is late and unlikely to get a reply but here goes.. Is there any condition the panel’s have to be in.. will they accept grade C or even grade D panels? How about used panels? I didn’t see where they specified this I assume it’s fine so long as it puts out power and I’ve got a receipt from a busisness.

  76. Anna says:

    I am purchasing sun panels. The seller says that the company gets State credit. Is that true?

    1. Ben Zientara says:

      Really depends on what state you’re in. Some states require that a licensed contractor does the work, while others don’t. We need a little more information to determine your specific eligibility.

  77. Suzie says:

    I live in a stand alone condo. All of the roofs and skylights are being replaced. Owners will be assessed a percentage of whole project. Can I receive a credit and can I declare whole amount for my unit or only my percentage of whole amount?

  78. Carol says:

    I own my home, live downstairs and rent out the upstairs. The renter pays his own electric bill. The solar panels would be for my downstairs half of the house. Can I claim the federal credit?

    1. Ben Zientara says:

      Hi, Carol. That’s a really good idea, and a very complicated question!

      I won’t be able to answer it fully, but I can frame the issues at hand a little in the hopes that it leads you in the right direction.

      Since the renter pays his own bill, I’m assuming he has his own electricity meter that is read by the utility company. If that’s the case, you can likely get a system that connects behind your meter and not his, which would mean it is powering only your home.

      The next question would be about zoning and owner-occupied rental property. That’s a question for a tax attorney or accountant, but the issue at hand here would be whether you can claim the home (even the half of it that you live in) as your primary residence, and not as income property. If you’re already claiming the home as your primary residence, then I would bet you can claim the credit as long as the system is connected only to your meter.

      But again, contact a tax attorney or a CPA and ask these questions, because it’s a very complex situation.

  79. Steve says:

    The IRS language about “structural components” I believe refers to systems where the roofing and solar modules are integrated, and the roofing materials in question cannot be used independently without solar. I strongly urge anyone to contact a tax professional before relying on the language in this post indicating that you can claim any part of the cost of a (regular) roofing project as related to the solar system.

    1. Ben Zientara says:

      Thank you! Absolutely consult a tax professional. This post is only meant to be an informative guide.

  80. Dave says:

    Can I claim the credit on a home I don’t own? My parents own a home, but do not have enough income to have a tax due. If I pay for the solar installation on their home, can I claim the credit on my taxes?

  81. Abe says:

    Hi i have a question. Those 30% tax credit, if i do not work or apply taxes for this year, can i still get it back as refund money

    1. Ben Zientara says:

      Nope. Only if you have tax liability this year or next.

  82. Clyde says:

    If I install my PV system in 2016 but am unable to use all of the credit for that tax year, will I be able to roll my unused credit forward – given the 12/31/2016 ITC deadline?

  83. Don Ross says:

    I am right in the middle of installing solar energy to my home…..(my property.) But first I needed a new roof to hold the structure. Also to upgrade my home,….all my water pipes are leaking and

  84. Anonymous says:

    can i apply my 30% credit to a tax balance from previous years that i am paying on an installment plan?

    1. Ben Zientara says:

      Only if the solar installation was completed in the year for which you are paying.

  85. Anonymous says:

    I got the federal credit last year, if I sell my house and buy solar for the new home will I qualify for the credit again?

  86. Anonymous says:

    My mother lives with me and is considering purchasing solar panels for my home. Can she claim the federal tax credit for the installation even tho I own the home?

  87. Anonymous says:

    I pay over 7,000. In taxes each year. My system will give me a 7,000 tax credit.When I get my solar panels will I get

  88. Anonymous says:

    I hit enter and it posted. What I meant by the comment below is that if you owe texes normally and over pay you recieve your excess back. In this situation, it would lower the tax liability and any amount paid in excess would still be refunded. For instance, if I owe in taxes $5000 and paid in $10000. I would get a $5000 return because I overpaid. With the credit it would wipe out the $5000 and I would have no liability meaning I would receive $10000 in my return. It does not matter what you pay in.

  89. Anonymous says:

    The credit is off of your total taxes owed. It has nothing to do with what you paid in so changing the amoutn of dependents and having less withholding will not change how much you recieve for the credit.

  90. Anonymous says:

    The Fed tax credit is pure Bull hockey! The state credit is actually worth something! If the feds actually wanted to reward people for spending their hard earned cash on renewable energy, there would be a flat credit and the questions would be limited to “did you install it? Is it producing? Here’s your credit. The way it is set up is discriminatory against older people and prevents us from getting ANY fed credit, so all the feds’ blatting about renewable energy and 30% credit is an absolute crock.

  91. Anonymous says:

    We paid $20,040 for our PV system. 30% of that amount is $6,012. HR Block did our taxes this year (2014), and while going through the forms I noticed that line 53 of Form 5695 stated the Residential Energy Credit was only $4,913. We didn’t have any tax liability from the 1040, so why wouldn’t line 53 equal the $6,012?

  92. Anonymous says:

    Can I get 30% back on a second house I own which is not rental, however it is not the primary residence

    1. Ben Zientara says:

      Yes you can! The home you install solar on does not have to be a main home. It’s good you pointed out the “not rental” part. Rental property does not qualify.

  93. Anonymous says:

    I bought a solar package last year that included other energy-efficient upgrades (e.g., insulation, duct sealing, etc.). Do these upgrades count for the 30% tax credit?

    1. Ben Zientara says:

      It looks like line 19 of Form 5695 is where you enter the costs of energy efficiency improvements to your home (like the ones you describe above). The energy efficiency improvements only qualify for a 10% credit.

      Here’s a link to the Form 5695 instructions to help you work that out. You can use both Part I and Part II of the form to calculate your credit. Add the amounts in lines 15 and 30 and put that number in line 53 on Form 1040.

  94. Anonymous says:

    No one answered the very valid question about increasing number of dependents thus decreasing income withholding. It would be the only way I could see for a normal income person who usually receives a return to gain any benefit from the credit.

    1. Ben Zientara says:

      Adding dependents might reduce your overall tax burden, but it would also reduce the amount of the credit you can get back. This credit is based on the tax you owe (i.e., the tax your employer took out of your checks during the year or that you paid in self-employment premiums). If you get a refund at the end of the year, that means your total withholding exceeded your total tax. That doesn’t necessarily mean you get all your money back.

      If you add dependents and claim them on your W-4, you reduce your withholding and therefore the amount of tax you pay throughout the year. That would mean you’d end up getting less money from this tax credit, not more.

      Here’s a back-of-the-napkin example: You are married filing jointly, and you and your spouse made $75,000 last year. You get a standard deduction of $12,400, and two personal exemptions of $3,950, making your taxable income $54,700. Your total tax is about $7,300. If you have no dependents or other deductions, you pay that amount. Let’s assume your tax withholding through the year adds up to precisely that much. If you then installed solar panels for $20,000, you take the $6,000 credit and get a refund of $6,000. Your tax is reduced to $1,300.

      Now, if you have three kids, that complicates the math, but at the very least it reduces your taxable income by $11,400 (3x the personal exemption of $3,950). That means you owe less tax. $5,520, to be exact. So if you install those solar panels and claim the $6,000 credit, you get a refund of $5,520, and you have to claim the last $480 of your tax credit next year.

      You can’t get more money back than you owe, so if you add dependents and owe less money in taxes, you get less of the credit.

      Tax info I used for these calculations:

  95. Anonymous says:

    There is a credit limit applicable on line 14 of form 5695 that requires you use a worksheet that looks for only specific tax credits for child care several special needs categories of people. If these tax credits are not part of your 1040 submittal you have a credit limit of “0” Middle income people without these generally hardship credits in other areas find their solar panel limit to be “0” Happend to me last year per professional tax preparer and will happen again in 2014.

  96. Anonymous says:

    I installed my system in 2014. But approval from the state electrical inspector and local utility company was not done till 2015. Can I count that as complete in 2014 for taxes?

    1. Ben Zientara says:

      Our best advice is to claim the credit for 2014. As long as the installation job was complete and the payment was made in 2014, you should be good.

  97. Anonymous says:

    If I get back money from the IRS every year, should I change my W2 forms to show more dependents, so that I might be able to have to pay, thus ableing me to use the tax credit??

  98. Anonymous says:

    Lets say I owe nothing in taxes for 2014. Do i still fill out the forms and claim nothing for the tax credit?

    1. Ben Zientara says:

      Yes you should! Even if you don’t owe anything, you’d have to fill out the forms as shown, but put “$0” onto lines 14 and 15 of Form 5695, and also on line 53 of Form 1040. If you anticipate paying taxes next year, you’ll be able to claim the credit then.

      Unfortunately, if you don’t anticipate paying any taxes at all for the two years after you install a solar panel system, the ITC will not do you any good.

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