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I am located in the USA. The federal government allows a 30% tax credit on solar. Details here: http://programs.dsireusa.org/system/program/detail/1235

In addition to that, it appears to me that solar is also tax deductible. Details here: http://programs.dsireusa.org/system/program/detail/666

The second link contains the following quote:

If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

So, the way this sounds to me is as follows: - I purchase $20,000 worth of solar equipment - I get a tax credit of $6,000 (30%) - The remaining cost (70% or $14,000) is tax deductible - I earn back 15-20% or whatever my rate is on this ($2,100 - $2,800)

Can anyone confirm this is how it works? I'd really hate to pull the trigger on an expensive system (more than my example) and not have my numbers worked out properly.

  • From the IRS link DSIRE provided: "Energy conservation subsidies. You can exclude from gross income any subsidy provided, either directly or indirectly, by public utilities for the purchase or installation of an energy conservation measure for a dwelling unit." The tax deduction would be related to a subsidy from the utility company, not the cost of the panels, as I'm understanding that section. – BobbyScon Jul 21 '18 at 17:15
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You are misunderstanding what that quote is telling you.

If a taxpayer claims federal tax credits or deductions for the energy conservation property, the investment basis for the purpose of claiming the deduction or tax credit must be reduced by the value of the energy conservation subsidy (i.e., a taxpayer may not claim a tax credit for an expense that the taxpayer ultimately did not pay).

If the solar company sells and installs a system and charges you $20,000; and the power company kicks in $5,000; then when determining the credit or deduction the $15,000 price you actually paid is used for the calculation.

That would mean that the 30% credit would be for $4,500 not for $6,000.

Generally you can't claim a credit and a deduction for the same event with the same taxing authority. It can be possible that a program will have a deduction or credit at the federal, state, and local level. But within one level if a deduction and credit exist you have to pick one or the other.

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