Solar Panels for Rentals 2025 Update

Can I Write Off Solar Panels for My Rental Property? ☀️💸

Installing solar panels is a great way to cut energy bills—and maybe even save the planet. But if you’re a savvy landlord hoping to slice your tax bill too, you're probably asking: "Can I write off solar panels for my rental property?" The answer is yes—but with a few caveats, IRS forms, and a sprinkle of patience.

⚖️ First, Let’s Talk Law (But Keep It Fun)

Thanks to the Inflation Reduction Act of 2022, Congress brought back the 30% energy credit for solar systems—just like disco and high-waisted jeans, everything old is new again! But here’s the catch:

If your rental property isn’t your personal home, you can’t use the residential energy credit. Instead, you must use the business energy credit under IRC §48.

In plain English: if you installed those solar panels on a house, you rent out on Airbnb or to a long-term tenant, you’re in business territory. That means new rules, new forms, and new chances to impress your accountant.

☀️ Example Time: Meet Landlord Larry

Larry owns a duplex. He lives in one unit and rents out the other. In 2024, he installs solar panels on the whole roof for $30,000. Because half the building is rented out, only $15,000 of the solar cost qualifies for the business energy credit. He works with his tax pro (hi 👋) to file Form 3468 and claims a 30% credit on the $15,000—that’s a $4,500 tax credit!

The other half? Larry claims the residential clean energy credit for his personal portion of the property. Two credits, one roof. Not bad, Larry!

🔍 The Eligibility Checklist

To qualify for the business energy credit under IRC §48:

• ✅ The property must be located in the U.S.

• ✅ You must be the one who built or originally used the system. (No, buying it used from Facebook Marketplace doesn’t count.)

• ✅ The system must be depreciable—used in a business or income-producing activity.

• ✅ It must meet current quality and performance standards—don’t install discount solar panels off Wish.

🧾 Base Credit vs. Bonus Credit (a.k.a. IRS Math Time)

For solar systems placed in service after Dec 31, 2021, the base credit is 6%. BUT—and it’s a big but—you can boost it back up to 30% if:

• You meet wage and apprenticeship rules (basically paying workers a fair wage and using qualified apprentices), OR

• The system is under 1 megawatt (most rentals are), OR

• You started construction before the IRS issued guidance.

So, if you’re a landlord installing a regular-sized solar system and you didn’t hire an army of underpaid robots to build it—you’re probably golden.

💼 Bonus: Solar Panels Are Depreciable Too!

Beyond the credit, you can also depreciate the cost of the panels over five years using MACRS (Modified Accelerated Cost Recovery System). That means extra deductions beyond the upfront credit. Think of it as your tax return doing a happy little solar-powered dance.

🤖 What Forms Do I File?

You’ll need to include Form 3468 (Investment Credit) with your tax return. Fill out:

• Part I: Check box 7a if your system is under 1 megawatt.

• Part VI-B: Enter the juicy solar details.

And if you’re working with a tax pro, bring snacks—we love snacks.

⚡ A Quick Recap for the Too Long; Didn't Read. Crowd:

• You can write off solar panels for rental property under the IRC §48 business energy credit.

• Most small-scale landlords qualify for the full 30% credit (plus depreciation).

• File Form 3468 to claim it.

• Act fast—construction must begin before January 1, 2026!

🗓️ Still Unsure?

If your head is spinning like a solar inverter in July, don’t worry. Click here to set up a meeting with a tax pro at Lisa Brugman, EA & Associates. We’ll make sure your solar dreams don’t turn into IRS nightmares. 🌞