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Tax Credit when Buying out Leased Panels?

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  • Tax Credit when Buying out Leased Panels?

    Hi,

    I am looking at purchasing a house that currently has leased panels through Sun Power. They offer a buy out option at the time of a home sale.
    If I would buy them out, would I still qualify for the 30% federal tax credit? Or will the leasing company have already claimed it when they originally installed them. Sun Power won't offer any advice.

  • #2
    I believe you would be buying used equipment. As such, that purchase does not qualify for the 30 % tax credit.

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    • #3
      99.99% sure they claimed it and you would get bit if you were audited (perhaps the only way the IRS would find out?) That is how the leasing company makes their financial side work. You are buying out the residual on lease, post all rebates and depreciations/amortizations..

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      • #4
        Figured that's how it worked.

        Thanks anyway

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        • #5
          Did you confirm this? Sunrun has not gotten back to me, and I'm in the same position, wondering if there will be tax incentives when I buy the system out in the middle of its lease after buying a home with the system already in place. I'm in NJ. the incentives are great!...if I qualify. 🤷♀

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          • #6
            Originally posted by kanoa9321 View Post
            Hi,

            I am looking at purchasing a house that currently has leased panels through Sun Power. They offer a buy out option at the time of a home sale.
            If I would buy them out, would I still qualify for the 30% federal tax credit? Or will the leasing company have already claimed it when they originally installed them. Sun Power won't offer any advice.
            The leasing company claimed the tax credit but even if they didn't, you are buying a used system so no credit.
            OutBack FP1 w/ CS6P-250P http://bit.ly/1Sg5VNH

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            • #7
              Originally posted by AMarieB View Post
              Did you confirm this? Sunrun has not gotten back to me, and I'm in the same position, wondering if there will be tax incentives when I buy the system out in the middle of its lease after buying a home with the system already in place. I'm in NJ. the incentives are great!...if I qualify. 🤷♀
              no there will not be tax credits for you as the system is now used. The tax credit is only on new equipment. You can get the SRECs though.
              OutBack FP1 w/ CS6P-250P http://bit.ly/1Sg5VNH

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              • #8
                You know this thread is from 2017 right and that the OP has never posted here since then?

                I'm 100% certain Sunrun took the incentive as they would be idiots not to do so. I think they only have to hold ownership for maybe 5 years or so in order to keep the full amount, even if the system is sold some years later to a prospective homeowner like yourself. You should check on that time period but I think I read here it was 5 years..

                You might want to read this about a lease buyout in California during a home sale. It has some good info from a reporter who learned how they work during a home purchase. I think you can forget about getting any tax advantages when you buy a used system. No one installing a PV system walks away from those incentives, leaving them for someone else to claim.
                https://www.bloomberg.com/graphics/2...-solar-panels/

                Dave W. Gilbert AZ
                6.63kW grid-tie owner

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                • #9
                  Thanks, I have read that Bloomberg piece, which is great, as I was doing a lot of research on Sunrun in the decision-making process for purchasing this home! It appears that the fair market value of the system, if it's bought mid-lease, is assessed and "determined by a third party appraiser, DAI Management Consultants, Inc ("DAI"). ...DAI takes into account ...any applicable incentives." So, I suppose that may help lower the cost. But... TBD
                  It does look like I can get the sales tax taken off, but confirming all of this currently.
                  The word "tax" does not appear in the lease contract at all, but I did just find this, which I now understand to be referring to tax incentives. Such a bummer:

                  "(h) You agree that SunRun alone will receive any credit, rebate, environmental attribute, or other payment or offset that may be attributable to the Solar Facility and all incentives will be sole property of and transferable by SunRun. Notwithstanding the foregoing, if you purchase the solar facility from SunRun, you will own, and be entitled to proceeds from the sales of, solar renewable energy credit and renewable energy credit earned after the date you purchase the solar facility from SunRun. "
                  Last edited by AMarieB; 08-13-2019, 12:40 PM.

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                  • #10
                    Originally posted by AMarieB View Post
                    Thanks, I have read that Bloomberg piece, which is great, as I was doing a lot of research on Sunrun in the decision-making process for purchasing this home! It appears that the fair market value of the system, if it's bought mid-lease, is assessed and "determined by a third party appraiser, DAI Management Consultants, Inc ("DAI"). ...DAI takes into account ...any applicable incentives." So, I suppose it's possible that some of that 30% off will trickle down, lowering the cost. TBD...
                    It does look like I can get the sales tax taken off, but confirming all of this currently.
                    The applicable incentives would be continuing incentives like SRECs, Net Metering, etc. The 30% tax incentive is only to the company (as they used the commercial incentive) that purchased the equipment new, it will not trickle down.
                    OutBack FP1 w/ CS6P-250P http://bit.ly/1Sg5VNH

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                    • #11
                      Just to make things more confusing, I asked the Service Transfer Rep (the person I have to communicate with for any questions about the contract already in place, the actual solar system, etc. in the house I'm buying) directly if I would get any tax incentives after I purchase the system outright and buy out the contract, which has been leased for 8 years already of a 20-year lease. She responded by email: "Unfortunately, we do not have any information regarding the tax credits. When Sunrun owns the solar system, we receive the tax credits/incentives. If you were to purchase the solar system, you would receive those credits but it would be best to talk to a tax advisor for the specifics."
                      So 1. she doesn't have any info. But 2. She does actually have info, and that's that Sunrun receives the tax credits, plus 3. If I purchase the system, I'd receive the credits.
                      I think she means if I purchase the system up front, AT THE BEGINNING, and NEVER SIGN A LEASE, as opposed to what I asked about --if I purchase the system now -- but of course she doesn't say that perfectly clearly. And it'll take another 4 days before she responds to my email asking for clarification, but it doesn't really matter
                      Thanks for the quick responses!

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