Fedral tax what part of total installation qualifies?

System
System Posts: 2,511 admin
in General Solar Power Topics #1
Hi,

I just registered and hope someone can answer a general question.

My company is having a 20 kW system installed on our roof and we will be applying for the ARRA federal 30% tax break.

The issue is we need to re-roof the facility before we mount the solar up there or we would have to pull everything down to re-roof in a couple of years.

This is a major cost and I'd like to know if it can be claimed as part of the cost of the system.

Basically what actually qualifies for the tax incentive? Design of the system? Materials (panels, racking, inverters etc.)? Labor to install it?

I know we have to show invoices for all this stuff.

Thanks,
Rick
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Comments

  • Solar Guppy
    Solar Guppy Solar Expert Posts: 1,989 ✭✭✭
    #2
    Re: Fedral tax what part of total installation qualifies?

    We are not tax accountants here, but my understanding is NO, re-roofing is not an expense that is directly part of the PV system. Your CPA is the one to make that call for your tax return
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  • System2
    System2 Posts: 6,290 admin
    #3
    Re: Fedral tax what part of total installation qualifies?

    Thanks Solar Guppy. Too bad our CPA was the one asking us this question. Guess he should be doing his homework. I searched all over the internet and the treasury site and it doesn't state what does and doesn't qualify as part of the cost of the project. Was hoping that an installer on this board may have run across this before.
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  • Windsun
    Windsun Solar Expert Posts: 1,164 ✭✭
    #4
    Re: Fedral tax what part of total installation qualifies?

    Anything DIRECTLY associated with the solar project is deductable according to a fact sheet I read a while back. See also http://www.dsireusa.org/incentives/incentive.cfm?Incentive_Code=US37F

    From what I gathered, if you need to dig a trench to run new conduit or wiring, that is part of the sytem. If your roof is broken that is not - but for example if you needed to add an extra support rafter for the panel weight, that probably would be - but having to repair an existing rafter would not be.

    But opinions and IRS findings are all over the map - for example, repairing a roof is not deductible, but upgrading to a more energy efficient roof that just happens to also repair it would be. :confused:

    On the other hand, with all the silliness going on in congress, some opinion is that the IRS is probably so totally overloaded that they would never notice either way unless it was a large number. But you take your own chances.
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  • System2
    System2 Posts: 6,290 admin
    #5
    Re: Fedral tax what part of total installation qualifies?

    Hopefully this will help someone else. Clearly our new roof is not a qualified cost to install solar, but the IRS does allow reflective roof in conjunction with PV or solar curtain.

    I found the reflective roof to be especially interesting. Here is the pdf about the "Dual Use" solar ruling.

    http://www.publications.pwc.com/DisplayFile.aspx?Attachmentid=3932&Mailinstanceid=18718
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  • System2
    System2 Posts: 6,290 admin
    #6
    Re: Fedral tax what part of total installation qualifies?

    Thanks Windsun.

    I agree, the documentation on the tax incentive is terrible and leaves a lot of questions unanswered. Just says "qualified cost" without saying what that is.

    Nice forum here. I'm an energy guy from way back, but this tax stuff is just confusing. I'll be checking back in.

    Great resource.
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  • mike95490
    mike95490 Solar Expert Posts: 9,583 ✭✭✭✭✭
    #7
    Re: Fedral tax what part of total installation qualifies?

    how effective will a reflective roof be under solar panels ?
    Powerfab top of pole PV mount | Listeroid 6/1 w/st5 gen head | XW6048 inverter/chgr | Iota 48V/15A charger | Morningstar 60A MPPT | 48V, 800A NiFe Battery (in series)| 15, Evergreen 205w "12V" PV array on pole | Midnight ePanel | Grundfos 10 SO5-9 with 3 wire Franklin Electric motor (1/2hp 240V 1ph ) on a timer for 3 hr noontime run - Runs off PV ||
    || Midnight Classic 200 | 10, Evergreen 200w in a 160VOC array ||
    || VEC1093 12V Charger | Maha C401 aa/aaa Charger | SureSine | Sunsaver MPPT 15A

    solar: http://tinyurl.com/LMR-Solar
    gen: http://tinyurl.com/LMR-Lister ,

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  • Cariboocoot
    Cariboocoot Banned Posts: 17,615 ✭✭✭
    #8
    Re: Fedral tax what part of total installation qualifies?
    mike90045 wrote: »
    how effective will a reflective roof be under solar panels ?

    If it gets you the tax break its very effective! :p

    I'm not an accountant, but my wife is. 25+ years experience. Unfortunately we live in Canada so have no actual experience with this specific part of US law.

    But as a general rule Windsun's interpretation is correct: changes or modifications (but not repairs) necessary for the install would be considered deductible under the terms of such a break. A new roof per se would not, although it would come under either repairs/maintenance or capital improvement (depending on the cost).

    That doesn't mean the IRS would agree, or even understand what you're talking about. Tax agency bureaucrats can be quite obstructive and officious. Also stupid. :p
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  • JJones
    JJones Registered Users Posts: 6 ✭
    #9
    Re: Fedral tax what part of total installation qualifies?
    rickallen wrote: »
    Hi,

    I just registered and hope someone can answer a general question.

    My company is having a 20 kW system installed on our roof and we will be applying for the ARRA federal 30% tax break.

    The issue is we need to re-roof the facility before we mount the solar up there or we would have to pull everything down to re-roof in a couple of years.

    This is a major cost and I'd like to know if it can be claimed as part of the cost of the system.

    Basically what actually qualifies for the tax incentive? Design of the system? Materials (panels, racking, inverters etc.)? Labor to install it?

    I know we have to show invoices for all this stuff.

    Thanks,
    Rick




    Applying for a tax credit or the federal grant?
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