Learn What You Need to Know About the Residential Federal SolarTax Credit

It is only an example cost to make you understand easily. However, according to Energy Sage gross cost of installing a solar panel system in 2021 is $16,860, and you can claim $4,618 as a tax credit which is an excellent relief for homeowners. 


What property is Qualified for a tax credit?

You do not necessarily be a homeowner to claim a tax credit. However, if you are one of the following persons who have properties where they have installed solar panels, you are eligible for the tax credit. 

  • House owner 
  • Houseboat owner
  • Mobile homeowner
  • Cooperative apartment owner
  • Condominium owner
  • A homeowner that conforms to Federal Manufactured Home Construction and Safety Standards

But if you are a renter where a landlord has installed the solar system, you are not eligible for a tax credit. 

What costs are eligible for tax credit while calculating the total installation cost for a solar system?

  • Solar-powered components that produce electricity or heat water
  • Geothermal heat pumps
  • Small wind turbines
  • Fuel cell property (limit $500 for each half kilowatt of capacity)
  • Solar-electric collecting roofs and roof products
  • Solar power storage equipment like UPS
  • Some installation and labor costs

Solar equipment used to heat the swimming pool or hot tub is not eligible for the tax credit. Similarly, if you buy a solar system on a lease, you cannot get the tax credit. 

You cannot claim a tax credit for rented property. However, if you also live in that house for a part of a tax year and only rent out when going away. Then, you can claim tax credit only for those days when you live in the house.