The Internal Revenue Service issued a private letter ruling this week to an individual owner of solar panels installed in an off-site net-metered community solar garden.  In the Ruling, the Service confirmed the individual’s eligibility to claim the residential income tax credit for 30 percent of qualified solar electric property expenditures pursuant to Section 25D of the Internal Revenue Code.

The Ruling is significant in several respects:

1. it confirms that an individual who owns only some of the solar panels and other property comprising a community solar garden may claim the credit,
2. it appears not to require direct tracking of the electricity produced by the taxpayer’s solar panels and, instead, permits allocation of the aggregate amount of electricity produced by the array based on the number of panels owned by the taxpayer, and
3. it does not require the taxpayer to contractually agree with the utility that the taxpayer owns the electricity produced by the taxpayer’s panels until drawn from the grid at his residence.
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