SEC 25C refers to the $500 home or residential energy efficient credit expired after 2016.
Sec 25D refers to the solar electric and solar water heating systems residential energy efficient property credit (REEP credit).There is no dollar limit on the credit and credit percentages are: through 2019 the credit amount is equal to 30 % of the cost of eligible property placed in service in 2017, 2018, or 2019; through 2020 the credit is 26 % of the cost of property placed in service in 2020; through 2021, the credit is 22 % of the cost of property placed in service in 2021.
Qualified solar electric property costs: These costs must be for use of solar energy to generate electricity for use in your main or second residence located in the U.S. You may rely on the manufacturer’s certification in writing that a product is a qualifying property for the credit. Keep the certificate for your records.
Qualified solar water heating property costs: These costs must be to heat water for use in your main or second residence located in the U.S. At least half of the energy used by the solar water heating property for such purpose is derived from the sun. The property must be certified for performance by the nonprofit Solar Rating Certification Corporation (SRCC) or a comparable entity endorsed by the government of the state in which the property is installed. For a summary of water heater systems ratings with names and addresses of participating suppliers visit SRCC’s website: www.solar-rating.org.
Basis adjustment: It is important to know that the costs related to qualified electric residential property increases the cost of your property but is reduced by the amount of the credit claimed in your Form 1040 using Form 5695.
Mixed-use: If only 20% or less of the property is used for business use, 100% of the cost maybe eligible for the credit. On the other hand, if less than 80% of the cost is used for non-business use only that portion of the cost is eligible for the credit under Code Sec 25C(e)(1) and Code Sec 25D(d)(7). You may qualify even if you have a home office.
Before January 1, 2017: If property is placed in service before 2017 , the credit amount is generally 30% of the cost of qualified solar electric property, solar water heating property, small wind energy property, geothermal heat pump property, and fuel cell property.
After December 31, 2016 but before January 1, 2022: If the property placed in service after December 31, 2016 and before January 1, 2022, the credit is available only for eligible solar electric property and solar water heating property.
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Disclaimer: Any accounting, business or tax advice contained in this communication is neither intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.
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Al-os & Associates Accountancy Corporation provides accounting and tax services to individuals, corporations, LLCs and business entities. The Firm has a niche in defending taxpayers audited by the IRS and other governmental agencies.