What is the Solar Energy System Equipment Credit?

Tax Law section 606(g-1) provides for the solar energy system equipment credit. The credit is allowed for certain solar energy system equipment expenditures. To qualify for the credit, the solar energy system must use solar radiation to produce energy for heating, cooling, hot water, or electricity for residential use. The equipment must be installed and used at your principal residence in New York State. The credit is allowed in the first tax year in which the solar energy system equipment is placed in service at your principal residence.

If the solar energy system equipment produces electricity, you must enter into a net energy metering contract with your electric corporation or comply with the electric corporation's net energy metering schedule before you can qualify for the credit. The completed solar energy system equipment must also be connected to the electric corporation's transmission and distribution facility. Other conditions and limitations set by the electric company may also apply. You should contact your electric company for more information before you purchase your equipment.

In the case of a cooperative housing corporation or a condominium, a percentage of the qualified solar energy system equipment expenditures may be attributed to each unit within the building. This information should be provided to each tenant-shareholder or condominium owner by the cooperative housing corporation or condominium management association.

In the case of a solar energy system equipment power purchase agreement or lease, no credit is allowed after the 15th year for a power purchase agreement or lease that exceeds 15 years in duration.

If your credit is greater than the amount of tax you owe, the balance will not be refunded to you. However, any credit amount in excess of the tax due can be carried over for a maximum of up to five years.

Solar energy system equipment means an arrangement or combination of components utilizing solar radiation, which, when installed in a residence, produces energy designed to provide heating, cooling, hot water, or electricity. The arrangement or components do not include equipment connected to solar energy system equipment that is a component of part or parts of a nonsolar energy system or which uses any sort of recreational facility or equipment as a storage medium. Solar energy system equipment that generates electricity for use in a residence must conform to the applicable requirements in Public Service Law section 66-j. However, if the solar energy system is installed by a condominium management association or a cooperative housing corporation, the rated capacity of the system cannot exceed fifty kilowatts (50,000 watts).

Principal residence means the home where you and your family live most of the time. A summer or vacation home does not qualify. Your principal residence can be a house, whether owned or rented, a mobile home, cooperative apartment, or condominium. If you move from one principal residence to another principal residence in New York State, a separate credit is allowed for each principal residence. You must have incurred the costs at the time the residence is your principal residence, and you must file separate Forms IT‑255 to compute your allowable credit for each principal residence.

If you are a tenant-shareholder in a cooperative housing corporation or condominium owner, the amount to enter is your share of the expenditures incurred, or payments made, by the cooperative housing corporation or condominium management association. This information should be provided to you by the cooperative housing corporation or condominium management association.

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