Solar Investment Tax Credit

What is it? How does it work?
Investment Tax Credit offered by the U.S. federal government helps reduce tax liability by a certain percentage of the investment costs of a new solar energy project. You can receive up to a 26% tax credit on your system!!
A. Yes, the residential energy efficient property credit allows for a credit equal to the applicable percent of the cost of qualified property. Qualifying properties are solar electric property, solar water heaters, geothermal heat pumps, small wind turbines, fuel cell property, and, starting December 31, 2020, qualified biomass fuel property expenditures paid or incurred in taxable years beginning after that date. Only fuel cell property is subject to a limitation, which is $500 with respect to each half kilowatt of capacity of the qualified fuel cell property. Generally, this credit for alternative energy equipment terminates for property placed in service after December 31, 2023. The applicable percentages are:
  1. In the case of property placed in service after December 31, 2016, and before January 1, 2020, 30%.
  2. In the case of property placed in service after December 31, 2019, and before January 1, 2023, 26%.
  3. In the case of property placed in service after December 31, 2022, and before January 1, 2024, 22%.
So does an RV qualify for this deduction?
U.S. Code § 25D - Residential energy efficient property Section (d) paragraph (2) states:
(d) Definitions
For purposes of this section—
(2) Qualified solar electric property expenditure
The term “qualified solar electric property expenditure” means an expenditure for property which uses solar energy to generate electricity for use in a dwelling unit located in the United States and used as a residence by the taxpayer.

This tax credit may apply to your RV if it qualifies as, or has been accepted by the IRS as, a second home for tax purposes. You must own the dwelling unit in question, not rent it. You also must own your solar energy system, rather than lease it from a third-party provider, in order to be eligible for the ITC. 

Currently it is possible to receive up to 26% tax credit but this can change over time. After 2023 the residential side of the solar investment tax credit is phased out completely, and homeowners will no longer be able to qualify for the credit. There is a possibility that the solar investment tax credit program will be extended to future years after 2023 – it has been extended in the past – but there’s no guarantee that will happen. The time to act is now!
When the time comes to file your taxes fill out the IRS Form 5695 to claim the credit. If you use tax filing software, make sure you look for any questions about clean energy or investing in solar energy for the year.
Solar is a worth while investment. Solar is a clean energy technology that can help reduce the carbon footprint while decreasing reliance on external fuels. Today’s solar panels are more efficient, highly durable and easy to maintain.
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