Can the solar panel tax credit be claimed if the client is financing them?

[LaraMultiservices]

Can a client claim the solar panel tax credit if he is financing the full cost? Can it be claimed on the full amount even if he has not paid the full amount?

[Skylane]

yes

[BobKamman]

You can be sure the contractor has been paid who marked it up 50% because people who like tax credits don't care about the cost.  Or the interest rate.  Now just hope she pays off the finance company before she decides to sell the house, because no buyer is going to want to assume that loan (even if allowed).  

[Skylane]

@BobKamman   The RE sales that I've seen w/ solar panels have all been unencumbered.  Remaining Solar note paid off at closing... 

below from a clients solar note. Lender has collateral interest in the property. Terms weren't too bad... 25 yr note: from July 22 Amount financed 25K @ 1.99%... Monthly payment $109...(far less than monthly electric bill in this area.

Assignment and Assumption. This Note may not be assigned by Borrower without the prior written
consent of Lender. If Borrower desires to sell or transfer its ownership of the real property on which the Fixtures
DocuSign Envelope ID: 
Lender:
Application Number:

e “Prospective Transferee”), the Note shall be paid in full at the closing of such
transaction. If, however, Borrower or any Prospective Transferee applies to Lender for consent to a transfer,
Lender may require such information concerning the Prospective Transferee as would normally be required from a
new loan applicant. If Lender does not affirmatively approve the assignment of the Loan to the Prospective
Transferee or if the Prospective Transferee fails to satisfy the terms and conditions of any approved assignment by
the closing of the transaction between Borrower and the Prospective Transferee, Borrower shall pay in full the
actual outstanding principal and interest Loan balance at such closing. The Lender shall be entitled to recover its
reasonable costs and expenses, including administration and attorneys’ fees, in connection with any such
assignment, whether or not it is consummated. Lender may assign or transfer this Note, in whole or in part,
without the prior written consent of Borrower.

[BobKamman]

@Skylane Paying off the note at closing is easy in a rising market.  But when the home was refinanced two years ago and the solar added about the same time, the 2024 selling price is probably less than the 2022 valuation, even before closing costs. 

This, from last July,  is not the first case we have seen of consumer fraud in the solar racket:

"PHOENIX – Attorney General Kris Mayes, along with the U.S. Department of Justice and the Federal Trade Commission, sued [company] and one of its lead generators, [company] and its owner [individual name], for violations of the Federal Trade Commission Act, the Federal Telephone Solicitation Rule, the Arizona Consumer Fraud Act, and the Arizona Telephone Solicitations Act in connection with unlawful telemarketing sales calls and misrepresentations relating to the sale and installation of residential solar panels in Arizona and beyond."

And the terms of the note you cite are great for people who believe in tax credits for dealer incentives, not for green energy.  "25 yr note: from July 22 Amount financed 25K @ 1.99%"  The dealer obviously bought down the interest rate, added that to the selling cost, and the buyer claimed a credit on the points along with the solar panel.  There oughtta be a law . . .

[qbteachmt]

"25 yr note:"

Oof. The roof should have been fresh underneath, or the solar gets disturbed for a roof job. And the solar assets don't typically last 25 years. Plus, the technology marches on, with different electronics and different materials and better performance, as panels fail, connections fail, converter and storage tech improves.

Being in debt for something you are buying is the same as owning (just not free-and-clear). Making payments due to a lease agreement is a whole 'nother fish to fry. When you read the IRS resources, notice it is based on "date placed in service" and not "date paid in full."

[Skylane]

@BobKamman  I was just commenting on terms of note....  I happened to have contract and note handy because i just sent this (particularly ugly) deal to an attorney friend...

Apparently, the California Solar company delivered and installed the panels (in NJ) but filed bankruptcy before completing the installation and bringing the system on line (over a year ago).  

The system is still not functional, but the bank wants payment.... etc. .  yuck

FWIW,  Homeowners insurance companies are taking a 2nd look at their underwriting guidelines for homes w/ solar panels.  Age of underlying roof, etc... doesn't take a wizard to figure out that repair/replace roof claim is substantially more expensive if the roof is covered in solar panels.