Solar Power Rocks logo

Solar Power Rocks - Clear info on home solar power rebates, tax credits, and other benefits

You ask, we answer: Any penalty for selling my solar house after getting tax credits?

Avatar for Dan Hahn
Published on 01/02/2010 in
Updated 09/05/2019

Rollin from North Carolina contacted us just a while ago to ask:

If you install a solar panel system, receive the applicable tax credits and then sell the house in two years, do you have to refund the tax credits? If not, is there any penalty? … I have a 20 year shingle roof…should I consider re-roofing prior to installing solar panels and, as a NC Outer Banks resident (Ocracoke), what is the hurricane experience? Corrosion experience? Average sunlight here in Ocracoke?Thanks, Rollin

ANSWER: Rollin, the tax credit issue is complicated and you should definitely double check our advice here with your local tax geek. We’re solar geeks, so the IRS doesn’t really count us as tax authorities.  Nevertheless, it is our understanding that you will not have to refund any of the portion of the tax credits that you’ve received thus far. Why do I say “thus far?” Because your 30% Federal Tax Credit vests over 5 years…. Therefore, you will only get 40% (2 years worth) of the full 30% Federal Tax credit. Again, please double check with your tax person, but that’s our understanding of the law from another solar financial guru, Andy Black.  (Of course, Andy is a solar guru, not a tax guru.) Please see below from someone who knows better for commercial and residential tax consequences.

Now to the easier answers:

If your roof is older than 8-10 years, you should definitely re-roof before installing the panels. That way, you won’t have to go through the added headache of snapping the panels off later and having to deal with re-installing the racking system. Also, if you coordinate your roof replacement with your solar installer, both warranties will stay intact. If you take your panels off later, re-roof, then reinstall, you may be voiding the original installation warranty of either the roof or the solar installation.

Regarding winds, solar racking systems have gotten so good over the years that you don’t have to worry so much about them blowing off your house in a hurricane as much as you may have to worry about your entire roof being blown off. That said, after going solar, you should cover the panels with your homeowners insurance to prevent any ill feelings down the road. Corrosion can happen when installations are done by amateurs. The equation looks like: wet + electric current + salt water + exposed conduit = big problem. This is why it’s important to go with an experienced, licensed crew, who aren’t going to cut any corners. Most solid solar installation outfits will warranty all their work for at least 5 years, though some of the best out there will warranty their work for 10 or more. (Btw, solar panels nowadays are warrantied to be producing at at least 80% of their original capacity at year 25, so you know they’ll still be kicking out significantly more than that then because the solar panel manufacturers don’t want to be shelling out new panels all over the country.)

We’re not Ocracoke meteorologists, but we know North Carolina gets significantly more sunshine than say, Germany, which has more solar installed per capita than anywhere else in the world. What makes solar make financial sense isn’t the sunlight, insomuch as the combination of available state rebates, financing, and tax credits (which NC has in spades). Cheers,

– Dan

Last modified: September 5, 2019

8 thoughts on “You ask, we answer: Any penalty for selling my solar house after getting tax credits?

  1. Avatar for PAM PAM says:


  2. Avatar for Danelle Danelle says:

    We are building our own solar panels and system. So far we have our trial system up and running, completely powering our shed. We plan to use our monthly savings to build more panels and such. Once we start building the panels and getting the system rocking for our home, can we claim the credits as we build, or does the system have to be complete before we can claim the tax benefits?

  3. Avatar for Evil Ed Evil Ed says:

    OK, I would like to know the following;

    Say a company in CA installs a solar system and leases it to me. The latter gets all the incentives, tax credits, handshake from Arnold and what have you.. Two months later and for whatever reason, I sell my house for which I am forced to pay the leasing company for the solar system (before the sale closing) the pre agreed price in a case like this, so it will remain installed on my roof as part of my house. Here comes the interesting question: The leasing company got all the incentives, as owner of the solar system. After getting paid for it, will it be allowed to keep them, or do they have to return them to:

    – The government?
    – Me?
    – The new house owner?

    Sorry to make your life difficult with such a question. I know you are a solar, not tax guru but with all these questions you are definitely getting there!

  4. Avatar for Sam Harriman Sam Harriman says:

    as your local installer about Galvanic corrosion :)

  5. Avatar for Tor a.k.a. "Solar Fred" Tor a.k.a. "Solar Fred" says:

    Justin, this is much better clarification than my original understanding. Thanks, man! You rock, always.

  6. Avatar for Justin Hoysradt Justin Hoysradt says:

    Residential Property:

    According to the SEIA Tax Manual for Solar Energy Professionals.

    Item #6: What if I sell my house, can I still claim the credit?

    A: The residential credit is not recaptured if the house is later sold. However, the homeowner will have had to reduced his tax basis in the house by the amount of the credit. He is more likely to have a gain on the sale of real property.

    Commercial Property

    According to the ARRA guidelines for the Section 1063 Grant in Lieu of Tax credits Page 18 article 7. Entitled “Recapture”

    If the applicant disposes of the property to a disqualifed person or the property ceases to qaulify as a specified energy property within 5 years from the date the property is placed in service, the section 1063 payment must be repaid to the Treasury as follows:

    100% if disqualfiying event takes place within 1 year

    80% 1-2yrs – 60-40-20% to 5 years.

    There are various disqualifying events such as the property is sold to: any Federal, state or local government, including political subdivision, agency or any organization that is a 501(c) or 501(a)…

    Hopefully this helps…


    1. Avatar for Maurice Maurice says:

      Why does Turbo tax claim i have to pay the investment tax credit back if I sale the house

      1. Avatar for Ben Zientara Ben Zientara says:

        I don’t know why TurboTax is claiming that, Maurice. Anyone who installs solar is eligible to claim the ITC based on costs they paid for the system. Once those costs have been paid, the taxpayer can claim the ITC and is never required to pay it back.

Have anything to add?

Your email address will not be published.

Subscribe to get solar news

The Federal Solar Tax Credit Has Stepped Down. It Steps Down Again In:

Learn more about the Federal Solar Tax Credit before it goes away.

Solar Power Rocks is a Wave Solar company

Wave Solar Logo