Solar for rental: depreciate and take take credit?

Forum|Forum|1 year ago
March 17, 2025
2 replies
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I bought solar for my rental. Am I able to depreciate it as a land improvement AND take the solar credits?

KrisD15

No, if you list it as an asset and depreciate it, the basis (your value/cost) must be reduced by the amount of the total credit.

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AmeliesUncle

Yes, you can take the solar credit on Form 3468.

Yes, you depreciate the solar. However, it is generally depreciated over 5 years. When entering the Basis/cost for depreciation, you reduce it by HALF of the solar credit.

pbmunkeyAuthor

Employee

HALF? not decrease it by the entire credit as someone else had previously answered?

2. does that apply to energy efficient water heaters and hvac?

AmeliesUncle

@pbmunkey wrote:
HALF? not decrease it by the entire credit as someone else had previously answered?

2. does that apply to energy efficient water heaters and hvac?

Yes, for the business/rental credit, Basis is reduced by half of the credit.

Offhand, I can't think of any tax credits for a business/rental property for water heaters and HVAC.