Generally, the majority of commercial solar systems qualify for the ITC. Go through the following checklist to see if yours does.
☑ The solar PV system is located in the United States or U.S. territories;
☑ The system has been purchased outright or with a loan (not leased);
☑ The project construction started between January 1, 2020, and December 31, 2020, but placed in service before 2024;
☑ The system is new (no more than 20% of the eligible value of the PV system can be classified as used equipment);
☑ You are a business subject to U.S. federal income taxes.
A solar project is considered to have commenced construction if:
- At least 5% of final qualifying project costs are incurred. Expenses have to be 'integral' to generating electricity, and equipment and services have to be delivered (or delivered within 3.5 months after payment).
- Or, 'physical work of significant nature' is commenced on the project site or on project equipment at the factory. Physical work has to be 'integral' to the project (preliminary activities on site, such as clearing the site or building a fence or an access road, aren't 'integral').
Remember, every tax situation is different. Always check with a tax expert for details.