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Solar panel credit panels - Rentals.


Max W

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The solar panels qualify because they are property for which depreciation is allowable; provided they meet the rest of the criteria for qualified property per sec 48(a)(3).   

The reference to allowable depreciation distinguishes it from the residential energy credit under code sec. 25(D). 

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11 hours ago, DANRVAN said:

The solar panels qualify because they are property for which depreciation is allowable; provided they meet the rest of the criteria for qualified property per sec 48(a)(3).   

The reference to allowable depreciation distinguishes it from the residential energy credit under code sec. 25(D). 

So, if they get the credit then that is deducted from the depreciable basis?

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Investment tax credit - IRS Form 3468

When a partnership purchases a solar system which will be used to power up a building AND sell the excess energy back to the local utility company..... can a credit be claimed for the equipment and installation costs that were incurred and paid in 2021 even though the installation won't be complete and the solar system won't be in place until 2022?

Conversely, if the solar system doesn't go into service until 2022, can costs that were paid in 2021 be used towards the tax credit?

As it relates to depreciation, I wouldn't be able to start depreciating until the project goes into service. Does the same apply to the tax credit? or can i claim the tax credit once I have spent the funds on the equipment and the installation?

 

 

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9 hours ago, Oh Baby! said:

claim the tax credit once I have spent the funds on the equipment and the installation?

The credit is available in the year the system is placed in service per sec 48(a)(1).

However, the percentage of the credit depends on the date construction began and the date placed in service, see Notice 2018-59.  

There is a safe harbor for determining the date construction began which is also explained in Notice 2018-59.

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