Updated FAQs were released to the public in Fact Sheet 2025-01 PDF, Jan. 17, 2025. This fact sheet contains all of the FAQs in one downloadable PDF.
Q1. What type of residence is required for the credit? For example, is the credit available for expenditures for a home rented by the taxpayer or for a second home? (added Jan. 17, 2025)
A1. A taxpayer claiming the credit for qualified solar electric property expenditures, qualified solar water heating property expenditures, qualified small wind energy property expenditures, qualified geothermal heat pump property expenditures, and qualified battery storage technology expenditures must have incurred such expenditures for a home located in the United States and used as a residence by the taxpayer. In this case, the taxpayer may rent the home for which such expenditures are incurred, and such expenditures may be incurred for the taxpayer’s second home.
A taxpayer claiming the credit for qualified fuel cell property expenditures must have installed such property on or in connection with a home located in the United States and used as a principal residence by the taxpayer. In this case, the taxpayer may rent the home on (or in connection with) which such property is installed. Due to the principal residence requirement, a taxpayer who installs such property on (or in connection with) the taxpayer’s second home would not be entitled to the credit.
The credit is never available for homes not used as a residence by the taxpayer. For example, landlords can never use the credit for homes they rent out but do not use as a residence themselves.
For more information about a taxpayer’s use of a home as a principal residence, see Treas. Reg. § 1.121-1(b)(2).
Q2. Can a taxpayer claim the credit for expenditures incurred for an existing home? What about a newly constructed home? (added Jan. 17, 2025)
A2. A taxpayer can claim the credit for qualifying expenditures incurred for either an existing home or a newly constructed home.
Q3. May a taxpayer claim the credit if the qualified property is also used for business purposes, such as in a dwelling unit in which the taxpayer also conducts a business? (added Jan. 17, 2025)
A3. If a taxpayer uses property solely for business purposes, the property will not qualify for the credit. A taxpayer who qualifies for the credit and whose use of the qualified property for business purposes is not more than 20% of the total use may claim the full credit. A taxpayer who otherwise qualifies for the credit, but whose use of the qualified property for business purposes exceeds 20%, must calculate the amount of credit by including only that portion of the expenditures for the property that are properly allocable to use for nonbusiness purposes.
Previous updates to FAQs
- Fact Sheet 2024-15 PDF, April 17, 2024
- Fact Sheet 2022-40 PDF, Dec. 22, 2022