Roofs and Rooftop Solar and the Federal Tax Credit

One issue with installing rooftop solar is the pre-existing condition of the roof.

Even though rooftop panels extend the life of a roof, it’s better to begin with a roof that’s newish, or in good condition. So, in the past few months, several people ended up calling in a roofer while we were together analyzing their solar proposals.

Some of these people have decided to tackle the roof first, and the solar

Image credit: nhenergychoices.com

panels… maybe the following year. Some other people asked us… since there’s a 30% federal tax credit for rooftop solar, could this also apply to the roofing job?  The answer is “maybe.”

The page explaining the Residential Renewable Energy Tax Credit does not specifically mention roofs. It states that “expenditures include labor costs for on-site preparation, assembly or original system installation, and for piping or wiring to interconnect a system to the home.” Some people consider the new roof, or some part of it, to be on-site preparation.

To obtain this credit you need to fill out IRS Form 5695. Instructions for Form 5695 Residential Energy Credits states that:

Qualified solar electric property costs are costs for property that uses solar energy to generate electricity for use in your home located in the United States. No costs relating to a solar panel or other property installed as a roof (or portion thereof) will fail to qualify solely because the property constitutes a structural component of the structure on which it is installed. The home doesn’t have to be your main home.”

Not very clear, we agree. One of our co-op members called up his accountant who interpreted the above as…If there’s a structural concern with installing panels on a roof; or there’s a prerequisite repair before the panels can go up; and both jobs are within a reasonable time frame, which we interpret to be within a month or so of each other; then the cost of the roof repair could also, in effect, be reduced by 30% from the tax savings.

As to whether the whole roofing job, or just the area beneath the panels is eligible, we suggest using your own judgement when filing. Be reasonable.

Image credit: maximumwindowprotection.com

If in doubt, please check with your tax advisor. And know that we are not tax advisors, and therefore not liable for this advice.

In this member’s case, the roof didn’t need to be replaced. And he will happily get to include the repairs along with the solar job when he files his 2017 returns.

Currently, we get to reduce our taxes by 30% of the cost of a solar installation. Know that the longer you wait, the more likely that this encouragement will disappear. Here you can see a timeline for the tax credit for homes with solar electric installations, also known as photo-voltaic systems.

  • 30% for systems placed in service by 12/31/2019
  • 26% for systems placed in service during 2020
  • 22% for systems placed in service during 2021
  • No plans yet for systems placed in service after 2021

Get ’em while the tax credit lasts…

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