Everyone can take advantage of the current 26% Federal Tax Credit, which will allow you to recoup 26% of the equipment AND installation costs of your solar power system. This Federal tax credit is for an unlimited amount.

The federal tax credit is a credit for investing in renewable energy such as solar and wind power. The credit reduces your federal tax liability when you file with the IRS. Here’s an example, if you get a credit of $8,700, that means you pay $8,700 less in taxes when you file that year’s return. It’s a direct, dollar-for-dollar reduction of taxes on your return. Any excess above taxes you owe can be carried forward to following years.

Federal solar energy tax credits are currently being reduced each year. If you get stuck paying federal taxes then it is in your best interest to take advantage of as many tax credits as you can in order to reduce your tax liability. (We are not a tax advisor so you should consult with an accountant or your tax advisor about how to maximize your tax credits and reduce your tax liability).

Some facts regarding Federal Tax Credit eligibility types of solar electric systems that qualify for the 26% Federal Tax Credit…

  • ANY complete solar power package, for home or business.
  • An emergency battery backup system, as long as the purchase includes at least one solar panel.
  • Purchasing products that expand your existing solar power system and include at least one solar panel.
  • Buying a solar system for RV and or boat. These have been accepted by the IRS as a second home for tax purposes.

Additional facts regarding the Federal Tax Credit eligibility:

  • The home served by the system does not have to be the taxpayer’s principal residence.
  • If the federal tax credit exceeds your tax liability, the excess amount may be carried forward to the succeeding taxable year.
  • There is no ceiling on the tax credit.
  • Applies to equipment AND installation costs.
  • For Residential Renewable Energy Systems, use IRS Tax Form 5695 to report your expenses. (It can be used for any residence, not just your primary one.) Learn more about residential tax credits.
  • Commercial systems have similar guidelines as residential systems but use IRS Tax Form 3468. Learn more about commercial tax credits.

Every individual’s tax situation is different. Please consult a tax professional to make sure your situation is applicable.

Federal Tax Credits Effective Through 2021

The Consolidated Appropriations Act extended the 30% credit for residential solar to the end of 2019. It then steps down over two years and expires completely at the end of 2021 (December 2015).

  • 26% for systems placed in service by 12/31/2020
  • 22% for systems placed in service after 12/31/2020 and before 01/01/2022
  • There is no maximum credit for systems placed in service after 2008.
  • Systems must be placed in service on or after January 1, 2006, and on or before December 31, 2021.
  • The home served by the system does not have to be the taxpayer’s principal residence.

Tax Credits For RV and Mobile Applications

The law permitting the federal tax credit is 26 USC Section 25D. It states: (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.

The IRS definition of “dwelling unit”: A dwelling unit includes a house, apartment, condominium, mobile home, boat, vacation home, or similar property. It also includes all structures or other property belonging to the dwelling unit. A dwelling unit has basic living accommodations, such as sleeping space, a toilet, and cooking facilities.

The US Tax Court memo 2014-160 on Jackon & Jackson v. Commissioner concludes an RV is considered a mobile home. Page 14 states: This Court has previously held that a motor home qualifies as a dwelling unit within the meaning of section 280A(f)(1)(A). See, e.g., Haberkorn v. Commissioner, 75 T.C. 259, 260 (1980); Dunford v. Commissioner, T.C. Memo. 2013-189, at *23-*24; Perry v. Commissioner, T.C. Memo. 1996-194, slip op. at 14.

Although we use the more modern term throughout this opinion, an RV and a motor home are one and the same thing. Petitioners and counsel used the two terms interchangeably at trial. Accordingly, petitioners’ RV is a dwelling unit for purposes of section 280A.

This information is provided for general information purposes only. We are not tax professionals and this does not constitute legal or financial advice. If you are uncertain, please check with a tax professional first!