Customer tax credit info
Given that your Fulcel is equipped with solar panels and energy storage systems, you could qualify for a tax deduction under Section 25D of the Internal Revenue Code. This deduction would apply to the portion of the Fulcel's purchase price that pertains to these eco-friendly features.
This information is provided solely for general awareness and should not be considered as professional tax, legal, or accounting advice. The eligibility and extent of the tax credit for your Fulcel purchase is dependent on specific criteria and prerequisites. It is essential to speak with your personal tax and accounting consultants to determine the applicability of a tax credit to your situation. Please note, Fulcel LLC does not offer tax, legal, or accounting counsel.
The 2022 Inflation Reduction Act introduced specific clauses relevant to eco-friendly equipment, particularly focusing on solar-powered systems and battery storage capabilities. Under Section 25D of this act, purchasers of residential eco-friendly technology, including battery systems with a minimum capacity of 3 kWh, are eligible for a tax credit. For your Fulcel trailer, this tax credit is accessible provided the equipment is integral to a residential unit within the U.S. and is utilized by the owner as their residence. Typically, this tax credit encompasses 30% of the equipment's cost. Each Fulcel is outfitted with solar panels, robust battery storage, and additional components relevant to energy efficiency. These elements are integrated during the manufacturing process, contributing to the overall cost and thereby potentially qualifying for the tax credit.
Can My Fulcel be Classified as a Dwelling Unit?
Yes, your Fulcel could be considered a dwelling unit. According to IRC Section 280A, the definition of a "dwelling unit" generally encompasses a range of living spaces including houses, apartments, condominiums, mobile homes, boats, or similar properties, along with any associated structures or property. This classification hinges on the unit providing fundamental living amenities, such as areas for sleeping, toilet facilities, and cooking provisions. Furthermore, legal precedents have affirmed the status of recreational vehicles (RVs) as dwelling units under this definition₂.
Does this tax credit extend to eco-friendly equipment installed on new dwellings as well as existing dwellings?
Yes. According to IRS guidelines under Section 25D, a taxpayer can claim the credit for qualifying expenses whether these eco-friendly installations are part of a new dwelling or an existing one. This provision ensures that the tax credit is accessible for both newly built homes and those undergoing upgrades with sustainable energy solutions.
Does my Fulcel need to be my primary residence in order to qualify?
No. Section 25D clarifies that a taxpayer may claim the credit for qualifying equipment “installed in or on a dwelling unit used as a second home or a vacation home by the taxpayer. But a taxpayer may not claim the § 25D credit for expenditures for improvements made to an investment property, such as rental property, that is not also used as a residence by the taxpayer.”₃
What Constitutes the Residence Criteria for Eligibility?
Typically, a property is deemed a residence for tax purposes if it is personally used by the taxpayer (or certain others) for a duration exceeding either 14 days or 10% of the total days it is rented out at a fair market value within the taxable year. This rule helps differentiate a personal residence from a rental property. To fully understand how your intended usage of the property may influence your eligibility for the tax credit, it's recommended to consult with a tax advisor.
How Do You Calculate the Tax Credit Value?
The residential clean energy property credit amounts to 30% of the expenses incurred for qualifying solar and energy storage systems installed on residential properties. This calculation can include labor costs directly related to the assembly or initial installation of these systems, as well as the expenses for wiring necessary to integrate the system with the residence.
To assist you and your tax advisor in determining the portion of your Fulcel's total purchase price that qualifies for the credit, we will provide documentation at the time of delivery. This document will offer an estimate of the eligible costs, reflecting the proportion of the overall price attributable to the solar and energy storage components, including their installation. It is important to consult with your tax advisor to determine the precise amount of the tax credit you should claim, based on this information.
What Happens if I Can't Utilize the Tax Credit in the Current Year?
According to Section 25D of the tax code, if you're unable to fully utilize the tax credit in the current year, you have the option to carry forward any unused portion. This means you can apply the remaining credit to reduce your tax liability in subsequent tax years. This provision allows for greater flexibility in managing tax credits, especially for those who might not have enough tax liability to use the entire credit in a single year⁴.
- Haberkorn v. Commissioner, 75 T.C. 259 (1980) (mini motor home); Jackson v. Commissioner, 672 Fed. Appx. 760 (9th Cir. 2017), aff'g T.C. Memo 2014-160 (RV and motor home are interchangeable terms); Loughlin v. United States, 82-2 USTC ¶9543 (D. Minn. 1982) (motor home).
- IRS Notice 2013-70
- FS-2022-40, https://www.irs.gov/pub/irs-drop/n-13-70.pdf.