Solar Investment Tax Credit (ITC), Sec 48 for Flipping

[Michael Koenig]

Question: Has anyone been able to take advantage of the Federal Solar Tax Credit for investment flip properties?

The most commonly implemented solar tax credit (Section 25D) for residential, primary residence, is simple enough to understand.

However, for us 'flippers', it's much less clear, unless you decide to house-hack and live in the property as a primary residence.

The IRS still provides a healthy 30% tax credit for implementation of solar, but it's much more convoluted in Section 48 (commercial credit). 

Granted, when flipping properties, it's important NOT to over-improve. However, as the market changes, with competition increasing, I feel that it may become increasingly important to separate your property from the herd. Implementing unique design cues and/or a small solar system could do just that (especially in areas where consumers are more conscious of social/environment/green issues). And if you can qualify for a healthy tax credit, then by all means!

For reference, I have a flip project about to begin in Oakland, CA. Small 900 sqft home (ARV $550K). Speaking to my solar rep, I can get a small system for about $10K (which translates into a $3k tax credit); but I believe the return on this would be at least 100%. When you factor in the tax credit, the return is much more.

My initial analysis of the researched info, is that the credit is viable, but I'd love to hear from someone who has been there, done that! ;)

Cheers!

Researched articles: TaxInsider article by Kenton Swift, IRS Energy Credit website, SEIA article on the Tax Credit, SEIA article on solar construction project guidance.