Tax credit for new solar install, 2017 expenses,but PTO won't be until January.

[CharlieEscCA]

A work colleague is having a solar system put in that has been taking forever because of other factors. He's getting close to being done, but won't have is PTO this year. He told me he can't take the solar tax credit until next year. In reading Form 5695, it seems to me one would take the credit in the year of expenses irrespective of PTO.

Does anyone else have experience with an install that is basically December complete but no PTO until January in terms of when to take the credit?

[sensij]

The instructions state:

Costs.

For purposes of both credits, costs are treated as being paid when the original installation of the item is completed, or, in the case of costs connected with the reconstruction of your home, when your original use of the reconstructed home begins.

"Completed" is generally understood to mean PTO.

[sensij]

However, it appears the rules changed when the tax credit was extended.

In 2015, the Omnibus Appropriations Act (P.L. 114-113) included a multi-year extension of the residential and commercial ITC described above and changed the previous "placed-in-service" standard for qualification for the credit to a "commence construction" standard for projects completed by the end of 2023.

[CharlieEscCA]

The instructions state:



"Completed" is generally understood to mean PTO.

Thanks. I was looking for language like that, but couldn't find it. My concern for my friend was that since $ were being paid in 2017, could those 2017 $ be claimed as a 2018 credit. I did tell my friend to ignore my thoughts and have his tax preparer figue it out

[ButchDeal]

In reading Form 5695, it seems to me one would take the credit in the year of expenses irrespective of PTO.

Does anyone else have experience with an install that is basically December complete but no PTO until January in terms of when to take the credit?

Well that would be wrong. It is when it is compelted and put into service. Even the simple instructions for the form state:

For purposes of the credit, costs are treated as being paid when the original installation of the item is completed

And the form itself states:

Residential energy property costs (must be placed in service by you; include labor costs for onsite preparation, assembly, and original installation) (see instructions).

[tyab]

I ran into this exact same issue. What you are referring to is this language in the instructions for 5695:

"Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed ...".

Your friend needs to talk to a tax professional. The issue is the word "completed" and there are existing case laws that defines that for a number of different situations.

[ButchDeal]

I ran into this exact same issue. What you are referring to is this language in the instructions for 5695:

"Costs. For purposes of both credits, costs are treated as being paid when the original installation of the item is completed ...".

Your friend needs to talk to a tax professional. The issue is the word "completed" and there are existing case laws that defines that for a number of different situations.

yes but none of them would define at the point of expenditure. Things I have seen tax advisors go on is passed final inspection and PTO.
passed final inspection is most reasonable as this means the system is ready to operate you are just waiting on the utility to give permission.

[Syberdog]

I would first look into what Sensij pointed out- get a copy of the exact wording of the law- that is the defining rule - not what used to be or is customary...