All Things Tax

All Things Tax

Like the title says, from the filing process and tax questions to tax policy and reform, you can search and share All Things Tax here. This is the place to find answers to all your general questions that don't fall under the other categories. And just a reminder: questions about software or online filing should be posted in DIY Products.

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Pioneer
Posts: 2
Registered: ‎08-10-2017
Accepted Solution

solar energy nj

Does anyone happen to know what the tax break and or refund you would get for solar energy in a residence in New Jersey?

Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: solar energy nj

Hi tb1983,

 

Welcome to the H&R Block community.

 

There is no refund or deduction that can be claimed for a new solar energy system, but there is a tax credit.  If you installed a new system this year then you can claim a credit for up to 30% of the cost of the system (including installation costs).  The credit is called the residential energy credit (REC) and can be claimed by completing Form 5695 with your tax return.  It's a non-refundable credit, so if the cost of your system was more than your tax liability you will not be able to claim the entire credit this year, but you can carry this credit forward to the next year if you aren't able to use it all.

 

Solar energy systems are the only energy efficient item for which you can claim a residential energy credit from 2017 forward, and unless the tax law changes at some point the credit for solar energy systems will phase out completely starting with 2022.

 

If you have any other questions I'll be glad to help.

 

Louis,

Senior Tax Advisor (Tampa, FL)

Pioneer
Posts: 2
Registered: ‎08-10-2017

Re: solar energy nj

thanks for the response. If I am purchasing a home with the solar system already installed but taking over the lease from the seller, does this tax credit still apply to me going forward?

Tax Pro
Posts: 5,780
Registered: ‎02-23-2016

Re: solar energy nj

tb1983,

 

You're welcome.

 

Unfortunately that does not qualify for the tax credit.  In order to qualify for the credit you must have purchased and installed the system and the credit must be originally taken on the tax return for the year in which the system was purchased.

 

As a homeowner though you will be able to deduct a number of things including your real estate taxes, mortgage interest, and mortgage insurance, as well as any amount of any of the above that you pay at closing, on Schedule A.  You can continue to deduct these three items each year for as long as you pay them.  If at closing you pay any assessment fees for the upkeep of public works, such as sidewalks, that were already in existence when you bought the house then you can also deduct those fees on Schedule A in the miscellaneous section.  Points paid down at closing are also deductible but may have to be spread evenly over the life of your loan depending on whether or not you meet a set of criteria for deducting them all at once.