How do I depreciate solar panels for office in home?

Forum|Forum|6 years ago
December 7, 2019
2 replies
11 views

Taxpayers have a home office and installed a solar energy system for $15,342. Their credit is $4,630. What amount is depreciated? What is the method? Thank you.

Lacerte Tax

This topic has been closed for replies.

Best answer by TaxMonkey

This is actually a very nuanced question. There is considerable disagreement about how home improvements are depreciated after a home office is established that are not directly related to the home office. For example, consider the situation where you remodeled your kitchen after establishing your home office. Can you justify any portion of the kitchen remodel as business related?

Specifically for solar panels, how much of the homes electricity expense is consumed by the home office? is it proportional to square footage? Maybee

I have a client who raises snakes in his garage, we carefully track his electric consumption because his garage is about 2/3rds of his total home consumption - and I deduct that amount.

For solar, I would say that zero is conservative and percent of home is reasonable. Unless the business is specifically energy intensive.

T

TaxMonkeyAnswer

Level 7

This is actually a very nuanced question. There is considerable disagreement about how home improvements are depreciated after a home office is established that are not directly related to the home office. For example, consider the situation where you remodeled your kitchen after establishing your home office. Can you justify any portion of the kitchen remodel as business related?

Specifically for solar panels, how much of the homes electricity expense is consumed by the home office? is it proportional to square footage? Maybee

I have a client who raises snakes in his garage, we carefully track his electric consumption because his garage is about 2/3rds of his total home consumption - and I deduct that amount.

For solar, I would say that zero is conservative and percent of home is reasonable. Unless the business is specifically energy intensive.

M

Mishalk

Level 2

Have you checked your local, state and applicable federal rules on commercial energy/energy production and sales? In most countries, the regulatory burden will be so high that solar panels are installed for a legitimate corporate purpose almost impossible to show some people prefer to use tri fuel generator portable. If this happens, you are looking at an investigation by multiple agencies and quite heavy fines.

Will you actually sell the energy to others? Your plan won't work if the reply is no. One of the fundamental principles of taxation is that a company does not cover non-deductible personal expenses.

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