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Sorry for the basic question, is there California sales tax on solar and PWs?
- Thread starter Southpasfan
- Start date
Sunrun publishes this guidance for California:
California Solar Incentives
Property Tax Exemption for Residential Solar Systems
Homeowners understand the value of property tax exemptions, so it’s good news that California is offering a tax exemption for residential solar systems until the end of 2024.8 And since purchased solar systems may increase the value of your home by up to $15,000 on average,9 you’ll get even more bang for your buck if you decide to move.
Sales and Use Tax Exemption
The Sales and Use Tax Exemption for Electric Power Generation and Storage Equipment10 is a welcome addition to the other incentives available in the Golden State. That means you can pocket the extra 7.25% state sales tax you would normally pay when you buy a home solar system and battery.
California Solar Incentives
Property Tax Exemption for Residential Solar Systems
Homeowners understand the value of property tax exemptions, so it’s good news that California is offering a tax exemption for residential solar systems until the end of 2024.8 And since purchased solar systems may increase the value of your home by up to $15,000 on average,9 you’ll get even more bang for your buck if you decide to move.
Sales and Use Tax Exemption
The Sales and Use Tax Exemption for Electric Power Generation and Storage Equipment10 is a welcome addition to the other incentives available in the Golden State. That means you can pocket the extra 7.25% state sales tax you would normally pay when you buy a home solar system and battery.
Here's the tax guide.
Business Taxes Law Guide – Revision 2020 Sales And Use Tax Regulations
SALES AND USE TAX REGULATIONS - Article 2
A contract to furnish and install a solar energy system onto a structure or realty is a construction contract which involves furnishing and installing both materials and fixtures. A solar energy system is defined as any solar collector or other solar energy device that provides for the collection and distribution of solar energy and, where applicable, the storage of solar energy.
(C) For the purposes of subdivisions (c)(13)(A) and (c)(13)(B), a charge for labor to affix solar panels purchased in a completed condition to a mounting system is not subject to tax.
I was charged 1,233.75 in tax for my (2) powerwall order. Parts are normally taxable, while labor isnt.. are we sure I wasnt supposed to be charged tax? Thats 1200 bucks I need to chase if this is true....
Interestingly, Semper Solaris just straight up says homeowners need to pay the sales tax (they don't differentiate between the cost of the hardware or the labor).
Do Solar Panels Increase Property Tax? | Semper Solaris
FWIW on my order with Sunrun they actually have lines that say the taxable portion of the install (the hardware part) and clearly show there's a tax on the hardware being applied to the total cash cost.
But my understanding from reading all this California tax language is that yes, you pay sales tax on the hardware but you do not pay sales tax on the labor portion of the installation.
Do Solar Panels Increase Property Tax? | Semper Solaris
FWIW on my order with Sunrun they actually have lines that say the taxable portion of the install (the hardware part) and clearly show there's a tax on the hardware being applied to the total cash cost.
But my understanding from reading all this California tax language is that yes, you pay sales tax on the hardware but you do not pay sales tax on the labor portion of the installation.
SoCal Dave
Member
There should be tax on the equipment, but not the labor. The $863.63 I was charged in taxes is appropriate for the cost of the equipment.
There is a tax exemption for solar for farms, but I don't think we have a bunch of farmers in this thread. If you didn't get taxed you might be lucky or you might have Tesla coming back to you later when they realize their mistake.
https://www.cdtfa.ca.gov/formspubs/pub235g.pdf
There is a tax exemption for solar for farms, but I don't think we have a bunch of farmers in this thread. If you didn't get taxed you might be lucky or you might have Tesla coming back to you later when they realize their mistake.
https://www.cdtfa.ca.gov/formspubs/pub235g.pdf
Unfortunately, it looks like there is no sales tax exemption in California on the "stuff." Remember, Cali, like other states, has different taxes, so the exemptions that are in place appear to be (1) property tax - the overall value of the property is not reassessed due to the increase in value caused by installing a system, (2) sales tax (believe it or not) on the power "sold" back to the grid.
There is an exception for the "stuff" but you have to be in the business of producing solar energy, not a resident simply putting panels on your roof. This is based on the definition of "qualified person" in Revenue and Taxation Code 6377.1, which, because I am a tax lawyer, I actually slogged through.
So on the bill I just got if you add up the value of the panels, inverters, gateway, PWs only, and times 8.3%, then you have the tax.
There is no sales tax on the installation labor part.
I would love to be proven wrong though. Please, do.
There is an exception for the "stuff" but you have to be in the business of producing solar energy, not a resident simply putting panels on your roof. This is based on the definition of "qualified person" in Revenue and Taxation Code 6377.1, which, because I am a tax lawyer, I actually slogged through.
So on the bill I just got if you add up the value of the panels, inverters, gateway, PWs only, and times 8.3%, then you have the tax.
There is no sales tax on the installation labor part.
I would love to be proven wrong though. Please, do.
Hmm.. I would imagine of most of us here, a lawyer who specializes in tax law and lives in this state might be what one would call an "expert opinion" lol
Well, when I started out I worked for a guy who did Cal sales and use tax. One of his clients, Boeing, had use tax on its equipment in the multiple millions per year.
I don't practice in that area enough to know off the top of my head. Its very odd that a company as big as Tesla could possibly get this wrong. If you don't collect sales tax, the Cal taxing authorities only look to one person -- the person who did the sales.
That's why posts from people who did not have it as a line item cause me to wonder.
I don't practice in that area enough to know off the top of my head. Its very odd that a company as big as Tesla could possibly get this wrong. If you don't collect sales tax, the Cal taxing authorities only look to one person -- the person who did the sales.
That's why posts from people who did not have it as a line item cause me to wonder.
Yeah, not sure what happened. I’m pretty sure I originally had an invoice which included sales tax, but after paying, the invoice in my account does not include it. I had several agreements/invoices over time since I originally ordered at a price of $10,500, and I think two revisions later (first 3.8 kW system original price, then price reduced, then when they determined they could fit the new panels, 4 kw) was at $8,200.
My portal says I’m paid up, and contains an invoice without sales tax on it. *shrug*
My portal says I’m paid up, and contains an invoice without sales tax on it. *shrug*
TessP100D
Active Member
It’s the new California. They don’t charge tax, they just take the deed to your house instead. They have to pay for all the free stuff they give away somehow. Right?
Devin94539
2018 M3P, MPP Sport Coils
