Residential Solar Credit

[peggysioux]

Taxpayer paid to have a solar system installed in home. Made a deposit of $1000 in 2012 and the remaining $28,000 will be paid in 2013. Being $1000 was paid thus far, should I do a credit for 2012 for $1000 and the balance in 2013? Or just all in 2013 when completed?

[taxea]

Taxpayer paid to have a solar system installed in home. Made a deposit of $1000 in 2012 and the remaining $28,000 will be paid in 2013. Being $1000 was paid thus far, should I do a credit for 2012 for $1000 and the balance in 2013? Or just all in 2013 when completed?

When was the work started? If in 2012 it can be taken.

[mactoolsix]

Installation must be complete

When was the work started? If in 2012 it can be taken.

I believe the installation must be complete before the credit can be taken:

http://www.law.cornell.edu/uscode/text/26/25D

26 USC § 25D - Residential energy efficient property

(8) When expenditure made; amount of expenditure
(A) In general - Except as provided in subparagraph (B), an expenditure with respect to an item shall be treated as made when the original installation of the item is completed.
(B) Expenditures part of building construction - In the case of an expenditure in connection with the construction or reconstruction of a structure, such expenditure shall be treated as made when the original use of the constructed or reconstructed structure by the taxpayer begins.

Mike

[Koss]

Solar System

How did they manage to fit all nine planets inside the house?

BMK

[taxea]

I did extensive research on this both for tax purposes and because I had PV installed. I know that I read somewhere that the credit can be taken once 5% of the total install fee is paid. I also know that the IRS allows businesses to take the credit when the work begins or when 5% of the cost is paid. I also know that the IRS isn't always fair but, if the deposit is paid, the contract signed, the work is started in 2012 and the house is occupied the credit applies inn 2012.

The big issue in Hawaii is that the tax office was allowing a 35% credit per system. One system consists of up to 17 panels. Most TP's have 20 to more panels installed and therefore qualified for two credits. The tax office realized that most of the TP's were qualifying for up to $10K in credits. Well, DUH! So they got the City Council to pass a temporary amendment that only allows one credit per property. Installers are up in arms and swamped because clients were signing contracts in droves in order to get the double credit before it expired. This is sop with Hawaii politics....head in sand and all issues.

[peggysioux]

Solar electric system

Being the unit's cost is 29,000 and only $1,000 was paid in 2012 (less than 5%) than total credit should be taken in 2013, correct?

[taxea]

Being the unit's cost is 29,000 and only $1,000 was paid in 2012 (less than 5%) than total credit should be taken in 2013, correct?

It it was a Hawaii return I would argue the point based on my prior post. I still say, though, that if the work was started in 2012 and by no fault of your client was not completed until 2013. Or again, by no fault of your client, wasn't started until 2013, I would put the options to the client and let him/her decide when he/she prefers to take it.