Federal Tax Credit Question

[MaxThisPower]

I talked with my CPA about having my business buy the solar panels for my house and a rental. What he said was that the business wouldn't be able to claim the credits because you have to own and live in the house. Since the business doesn't own the house, it wouldn't be able to get the credits.

Does that sound right?

I'm a little confused because Tesla can lease you a PV and claim the tax credit themselves. At least that's what I've heard. If that's true how are they able to claim it?

[Mike90250]

Business expenses are deductible. Just make your panels & gear, a biz expense. And it has to pass the smell test.

[bob-n]

CPAs can be wrong, but they know more about taxes than most people, so it is really risky to doubt their advice.

I think that there's a lot of clear information on tax credits for solar here:

https://www.seia.org/initiatives/solar-investment-tax-credit-itc

[azdave]

Would Tesla still be able claim the credit if they sign a lease contract with a business that doesn't own the home? Telsa probably has to lease to the owner of the home but what do I know? I only play a tax advisor on the internet.

I strongly suggest that no one ever, ever sign a PV lease, especially with Tesla (but few people listen).

[Ampster]

I have installed solar panels on two rental properties. Based on my situation it was worthwhile taking their cost as a business deduction. However the entity that owns the rental properties is my business. That may be the distinction that your CPA is making. YMMV.
This is not tax advice but my CPA agreed after the fact.

[MaxThisPower]

I don't know if it makes a difference when it comes to taxes but my business is a software development company so dealing with solar isn't in the same playing field.

It sounds like there are a few options.

1. I could take out a loan from my business and then pay for the solar. On my personal home, I could apply for the federal tax credit. On the rentals I would deprecate the expenses over several years. Then I would have to pay back the loan.

2. I could have the business pay for solar on my home and rentals. Then the business would take the cost as a business deduction and forgo the federal tax credit.

3. I could sign a "power purchase agreement" with my company. Then the business could apply for the tax credit and maybe take a business deduction. This route could be too complicated than needs to be just to save a few $$$ from taxes.

https://www.seia.org/research-resources/residential-itc-phasedown

If a homeowner leases the solar system or purchases electricity from the system through a “power purchase agreement” (PPA), then the tax credit is claimed by the company that is leasing the system or offering the PPA. The homeowner is not eligible to claim the tax credit on their personal federal income tax returns at all. The homeowner does not own the system and the tax credit is handled entirely by the company providing the system. (The tax credit claimed by the system owner enables them to offer better lease or PPA terms.)

I there blatantly wrong with these options? I want to see your opinions before I bring it up with my cpa.

[MaxThisPower]

CPAs can be wrong, but they know more about taxes than most people, so it is really risky to doubt their advice.

I think that there's a lot of clear information on tax credits for solar here:
https://www.seia.org/initiatives/sol...tax-credit-itc

Agreed, it's their job to understand taxes and I'm not going to prevent I can make better decision within out him. However I did want to get a second opinion just in case he wasn't too familiar with federal tax credit.

[J.P.M.]

Agreed, it's their job to understand taxes and I'm not going to prevent I can make better decision within out him. However I did want to get a second opinion just in case he wasn't too familiar with federal tax credit.

If I wanted a second opinion, I'd call a few CPA's and ask if they felt qualified to offer opinions on tax matters as they may relate to alternate energy situations before I engaged their services before I asked for opinions from anonymous posters with no skin in the game. Just sayin'.

[Mike90250]

I dislike someone else owning gear on my house and possibly being unresponsive when it leaks or stops working properly. you are at their mercy

[MaxThisPower]

I dislike someone else owning gear on my house and possibly being unresponsive when it leaks or stops working properly. you are at their mercy

I would agree with you but personally it doesn't matter to whether I pay for it or my business pays for it, I would prefer my business pays for it, I would still own the equipment. The problem is how to best deal with the IRS to maximize the tax deductions and tax credits without getting in trouble.

If I wanted a second opinion, I'd call a few CPA's and ask if they felt qualified to offer opinions on tax matters as they may relate to alternate energy situations before I engaged their services before I asked for opinions from anonymous posters with no skin in the game. Just sayin'.

That would be the wise decision. I would like to give him some reasonable solutions to consider but the final decision is going to be what my CPA says.

[Ampster]

.................

I there blatantly wrong with these options? I want to see your opinions before I bring it up with my cpa.

I watched your video and there was a paucity of financial analysis and no clear rate of return or payback analysis. I admire your desire to want to add renewable energy to your projects but it seems to me you are spending more time fretting over how to structure the cash to pay for it and ignoring the financial analysis.
Secondly, to get the best value for the money I spend on my accountant I usually structure a transaction after I ask his advice about his interpretation of the rules. Sometimes he has suggestions about how to structure a transaction but I make the decisions after reviewing his advice.

[J.P.M.]

That would be the wise decision. I would like to give him some reasonable solutions to consider but the final decision is going to be what my CPA says.

I'd not offer potential thoughts on solutions so as to be better able to guesstimate the CPA's knowledge level and maybe get some information you weren't aware of. The CPA may know squat but snag a likely solution you offer that sounds plausible or (s)he thinks you might like. In that case, what are you paying for ? You coach people for answers and you'll learn less about what they (don't) know.