Solar Energy Credit for a Renter?

[Harvey Lucas]

Client is a renter, ie, he does not own his home.

He pays $10,000 for a solar energy system that converts sunlight to electricity.

Does he qualify for the 30% credit?

Thanks,
Harvey Lucas

[ATSMAN]

Notice 2009-41 does not specifically say that the taxpayer must also be the owner of the property. Neither does the form 5695 (I think)?
Unless there is a newer regulation, I would say if the renter paid for those energy improvements they can claim the credit if it met the other qualified use requirements.

[Harvey Lucas]

Thanks Atsman, that is the way I saw it too.

I could not find anything in form or instructions indicating that you had to own the home to qualify for the credit.

[Roland Slugg]

If you do a Google (or other) search on this topic, you will find several articles that say, "No, the credit is available only for homeowners. Rentals/renters do not qualify." However, if you read §25D the Internal Revenue Code itself, it does NOT say that. What it DOES say is ....

In the case of an individual, there shall be allowed as a credit against the tax imposed by this chapter for the taxable year an amount equal to the sum of -- (1) 30 percent of the {type of property} expenditures made by the taxpayer during such year...

-and-

(2) QUALIFIED SOLAR ELECTRIC PROPERTY EXPENDITURE. The term "qualified solar electric property expenditure" means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.

You will note that the Code does NOT say that the home/residence must be owned by the taxpayer, and neither do the instructions for F-5695. Accordingly, I believe the credit can be taken by the renter.

[mastertaxguy]

solar panels--lease provisions?

The tenant's lease may have provisions dealing with 'additions' to the leased premises. Often such provisions require that such additions inure to the benefit of the landlord upon termination of the lease. If present in the post example, it may be the landlord who is entitled to credits.

Might want to check that. Landlord may also be stuck with an increase in property tax assessments (depending on the jurisdiction) and if so, perhaps the tenant can negotiate a deal to pay that increase due to the solar panels directly and take an itemized deduction for those.

[New York Enrolled Agent]

If you do a Google (or other) search on this topic, you will find several articles that say, "No, the credit is available only for homeowners. Rentals/renters do not qualify." However, if you read §25D the Internal Revenue Code itself, it does NOT say that. What it DOES say is ....

-and-



You will note that the Code does NOT say that the home/residence must be owned by the taxpayer, and neither do the instructions for F-5695. Accordingly, I believe the credit can be taken by the renter.

Roland - perhaps the regulations are definitive. The "old" energy credit section was §23. But that changed when the adoption credit became §23 and §25D eventually came to be. I mention this because I believe the regulations for §25D were carried over from the old §23 and reference that section and even the old §1034 - sale of residence (replaced by §121). I hope this is clearer than mud.

In any case: (e) Principal residence.

For purposes of section 23 or former section 44C the determination of whether a dwelling unit is the taxpayer's principal residence shall be made under principles similar to those applicable to section 1034 and the regulations thereunder (relating to sale or exchange of a principal residence) except that ownership of the dwelling unit is not required.

[Harvey Lucas]

Thanks for your input guys, very helpful.

Oddly enough, in this case, the solar energy system is portable so the tenant can take it with him when he leaves.