Taxpayer asks:
Hi Tax Girl!
I was wondering… if you’re a taxpayer who installed solar panels on your home, but has since moved – do you still qualify to receive the Residential energy credit?
Taxgirl says:
Residential energy credits allow you to receive a tax break for certain energy-saving improvements – like solar panels – installed in your home.
You may qualify for a tax credit for solar panels installed in your main home (where you live most of the time) between January 1, 2009, and December 31, 2021. You can claim up to 30% of the cost (including installation costs) with no upper limit through 2019; the percentage of the credit decreases beginning in the 2020 tax year. To claim the credit, file federal form 5695 (downloads as a pdf) with your federal income tax return.
Here’s where details matter: you’ll claim the credit in the tax year that the installation is complete. That tax year is when the costs of the improvements are treated as paid. If you sell your home after you claim the credit (assuming this is your main home and not a rental or other business property), there is no requirement that the credit be repaid. In other words, assuming that you otherwise qualify, the answer to your question is yes, you can claim the credit since a subsequent sale doesn’t matter.
One more thing: the credit is not refundable meaning that the amount of your credit can’t exceed what you owe in federal taxes. You can’t be refunded the amount of excess credit. You can, however, carry excess credit over to future years.
Before you go: be sure to read my disclaimer. Remember, I’m a lawyer and we love disclaimers.
If you have a question, here’s how to Ask The Taxgirl.
Related to this discussion is whether you can move, and take the credit again if you install panels on the home you move into, or install additional panels on the same property at a later date.