Only 1/4th tax credit on solar on my 4plex?

Tucson, Arizona
General Landlording & Rental Properties
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Only 1/4th tax credit on solar on my 4plex?

Kyle Swengel
Rental Property Investor · Tucson, AZ · Member since 2020 · 85 posts · 51 votes

Hi BP,

So, I'm under contract on solar to be put on my 4plex in Tucson AZ. I pay the utilities and I will always pay the utilities at this house. All four units are travel nurse mid-term stay housing, so it makes sense for me to keep them in my name. And I have since gotten rid of all of the gas appliances and water heaters in the building so the whole property is electric now. 

I live in one of the furnished units and I have it under the VA loan as my primary residence. But I was unaware that I would only be receiving 1/4th of the 30% tax credit because I only reside in 1/4th of the 4plex. Is this correct? And what else on this subject am I unaware of? I thought locking in an electricity payment or lack thereof would be a great choice for me, not to mention my property is perfect for solar with how tall and flat it is, and that I pay for all utilities. I'm a little shocked because I wrapped a few other things into the loan that are related that need fixed on the property thinking that I would get 30% back on those as well...

I'm a little frustrated and wonder where I went wrong, if I did. Please let me know your thoughts!

Kyle

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Nathan GesnerBusiness Member
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Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
3y
Quote from @Kyle Swengel:

I don't understand why it would work this way, other than to say that solar still feels like a scam to me. Costs more than it should, produces less than it should, and only survives because taxpayers are subsidizing it. 

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  • Chris SeveneyBusiness Member
    Moderator
    Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes
    3y

    @Kyle Swengel

    Doing some quick research online you can only claim rentals for the time you live in the rental and for your unit. If you have a 4 unit building and live in one unit and rent the other three and the solar is for all 4 units you get 25%.

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  • Nathan GesnerBusiness Member
    Moderator
    Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes
    3y
    Quote from @Kyle Swengel:

    I don't understand why it would work this way, other than to say that solar still feels like a scam to me. Costs more than it should, produces less than it should, and only survives because taxpayers are subsidizing it. 

    The DIY Landlord Book4.7248 Reviews
    WebsiteView Page
    1Reply
  • Holly Boss
    Rental Property Investor · Tucson, AZ · Member since 2018 · 23 posts · 7 votes
    3y

    Does Commercial solar have a tax credit perhaps for you or your llc to take? That is unfortunate your tax credit would be quartered like that and doesn't benefit you the same as a sfh homeowner. Seems like an injustice to me! I lived in my sfh when I had solar added before I had tenants, so my situation was different. Hope for the best for your situation! 

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  • Shawn Quinn
    Sugar Land, TX · Member since 2013 · 6 posts · 3 votes
    3y

    It would seem like you could expense the cost of the solar panels.  I expect you would amortize it but you will still be able to deduct the cost as an expense.  What am I missing here? 

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