In California, USA, in October of 2022 I signed a contract, paid a deposit, and began making payments (10 year term) on solar panels for an investment property

The unusually stormy season has delayed installation of those panels until April 2023.

In which year do I report the solar credit?

When I contracted/paid for it in 2022? Or when it actually enters service on the property in 2023? Or perhaps less likely, when I finish paying it off in 2032?

Note: you may see my other, similar question about the roof. I split them into separate questions because I suspect the answers are different and future searches may benefit from finding them independently.

1 Answer 1


The answer is when it actually enters service. See the instructions for form 5695:

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

Generally, in capital expenditure situations the timing of the expense is tied to entering the service, not (pre/post)payment. Otherwise folks would be trying to game the system by timing orders based on their tax convenience for some future work.

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