You cannot claim the federal solar tax credit if you lease your solar panels. The key requirement to qualify for the solar tax credit, which is currently 30% of the total installation cost, is that you must own the solar energy system. Whether you pay upfront, finance with a loan, or buy outright, ownership is necessary to claim the tax credit. If you lease the panels, the leasing company retains ownership and therefore claims the tax credit benefits, not you as the lessee.
This means that when you lease solar panels, the 30% tax credit goes directly to the leasing company that owns the system rather than to you. This is true regardless of the lease structure, including leases or power purchase agreements. This arrangement often results in higher overall expenses for the lessee since they do not benefit from the tax incentives that can reduce the effective cost of solar installation by a substantial margin.
In summary:
- Ownership required: You must own the solar system to claim the 30% federal solar tax credit.
- Leasing disqualifies you: If you lease, the leasing company claims the credit.
- Credit reduces tax liability: The credit is a dollar-for-dollar reduction in your federal income tax bill based on your system’s cost.
Thus, if maximizing tax credits is important, purchasing or financing ownership of your solar panels is the preferable option over leasing.
Original article by NenPower, If reposted, please credit the source: https://nenpower.com/blog/can-i-claim-the-solar-tax-credit-if-i-lease-solar-panels/
