Ran in to a few delays with my solar panel project. Nonetheless, Tesla was able to install the system last week. Got off the phone with Tesla earlier today and the rep said my 26% tax credit rate is locked in since my system has already been installed. I was under the impression that it was PTO that will lock in the 26%. Can anyone verify that? Thanks.
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2020 tax credit
- Thread starter Carbonfiber
- Start date
Installed and paid for is what counts, so as long as your city/county final inspection is in and you've been invoiced, then you're good to go.
I haven’t got final inspection yet. So I am no where near PTO status. That’s why I’m trying to figure out when the tax credit rate locks in. I am a bit worried it might run into next year and lose out on the 26%, but as I mentioned Tesla said the rate locks in on install date.
I do not entirely agree with this (though I am not saying you are wrong, just that in an edge case a tax professional can give the best answer.) IRS form 5695 for 2019 states "For purposes of both credits, costs are treated as being paid when the original installation of the item is complete" (https://www.irs.gov/pub/irs-pdf/i5695.pdf)
So, first, installed likely does not require inspection - only that Tesla has completed the install. Preferably, the system was tested, so it can be clearly claimed that is a working system. And, based on the above, it appears you may well be able to claim the credit even if payment for the roof is not made this year. (Absent advice from a tax professional, I would try to pay Tesla this year if possible, to avoid any questions.)
I am sure this question is going to come up many more times as we get closer to the end of the year and run into more edge cases where the install was done but inspection and/or payment were not completed.
I don't disagree. I was going for maximum possible requirements based on the most strict interpretation which definitely does not require PTO or even request for PTO.
Form 5695 instructions state: For purposes of both credits, costs are treated as being paid when the original installation of the item is completed,
Instructions for Form 5695 (2018) | Internal Revenue Service
There is no language about PTO. There is some room for interpretation. I agree, having a PTO would be a solid "completion". But if SCE drags their feet on the PTO and there is nothing more that can be done to the system except waiting for regulatory approval, I would think that would stand up to the "completion" test. At least that is what I would argue to my tax guy, and I would be shocked if he didn't agree.
Good luck on the PTO mnsweeps. I hope it comes quick for you!
Edit: I should refresh my page more often. @wjgjr said essentially the same thing 2 posts above me.
Instructions for Form 5695 (2018) | Internal Revenue Service
There is no language about PTO. There is some room for interpretation. I agree, having a PTO would be a solid "completion". But if SCE drags their feet on the PTO and there is nothing more that can be done to the system except waiting for regulatory approval, I would think that would stand up to the "completion" test. At least that is what I would argue to my tax guy, and I would be shocked if he didn't agree.
Good luck on the PTO mnsweeps. I hope it comes quick for you!
Edit: I should refresh my page more often. @wjgjr said essentially the same thing 2 posts above me.
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I’ve said this before in other threads, but I think what it really comes down to is the fact that the IRS guidelines are somewhat ambiguous and different people interpret them differently. There really is no black and white yes or no answer here. In fact, tax returns are basically done on the honor system. Anyone could claim credit for a solar system installed this year, whether they actually had one installed or not and unless they got audited no one would ever know.
If you are claiming the credit you (and/or your tax professional) needs to understand the IRS guidelines and be able to defend your choices in the event of an audit. An arguement like @Kodemonkey made above sounds like a great defense. Saying “Well, a bunch of guys on the internet said it was ok” is probably not so great.
So in the end, there really isn’t any definitive answer here. If you wind up in the position where your system has been installed, but you don’t have PTO yet you need to read and understand the IRS guidelines such that you are comfortable being able to defend your reasons for taking the credit in case you do get audited.
If you are claiming the credit you (and/or your tax professional) needs to understand the IRS guidelines and be able to defend your choices in the event of an audit. An arguement like @Kodemonkey made above sounds like a great defense. Saying “Well, a bunch of guys on the internet said it was ok” is probably not so great.
So in the end, there really isn’t any definitive answer here. If you wind up in the position where your system has been installed, but you don’t have PTO yet you need to read and understand the IRS guidelines such that you are comfortable being able to defend your reasons for taking the credit in case you do get audited.
Even though things in my system were not 100% completed at end of year, I made sure I paid for 100% of the system before end of year, and then wrote it off for that year.
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