Cohousing-L Mailing List: Re: Solar Panel Installation Financing

[Philip Semanchuk (philip]

> On Oct 26, 2023, at 5:16 PM, Claire Richards <clairerichardsrn [at] 
> gmail.com> wrote:
> 
> Greetings,
> We're exploring how to fund solar panel installation. We are a
> not-for-profit (but not non-profit) and are a cohousing association.
> We're aware there is a tax exemption of 30% but we don't pay taxes since by
> our by-laws we never make a profit. But we aren't a non-profit.
> I'm not certain if we qualify for the whole direct payment that non-profits
> are eligible for and wondering if others have figured this out and what you
> learned.
> Thank you,
> Claire


Hi Claire, 
Non-profits are eligible for a 30% _rebate_ on the price of their solar 
installation. This is in contrast to the 30% income tax credit granted to 
for-profit entities. 

As you might expect, the IRS is pretty particular about the definition of 
for-profit and non-profit. I assumed our HOA was a non-profit until I dug into 
the details and learned that for tax purposes we are a for-profit even though 
we only pay a nominal amount of income tax every year (< $100). A friend of 
mine is in a co-housing development where the HOA has the same tax structure, 
so it might be typical or common for HOAs. This is a quandary for us with 
regards to solar because, as a for-profit entity, we’re only eligible for the 
tax credit (not rebate), and with such a small annual tax bill it would take us 
decades to use up the tax credit we’d get from a solar installation. 

I’ve talked to the finance arm of a number of solar installers and to a couple 
of tax & accounting professionals, and to date no one has been able to suggest 
a straightforward way for our HOA to take advantage of the solar tax credit. 
I’ve heard of a couple of ideas that sound (to me) complicated and/or perhaps 
questionable in the eyes of the IRS. I’m not excited about pursuing any of the 
ideas I’ve heard so far.

Here’s an article about how the IRA affects non-profits and for-profits 
differently. I don’t have an particular opinion about  renewableenergyworld.com 
<http://renewableenergyworld.com/>, but this article explained the situation 
well as I understand it --

https://www.renewableenergyworld.com/solar/what-nonprofits-need-to-know-about-the-investment-tax-credit/

Here’s a summary of the most common organization types that are tax exempt. I 
assume (but am not 100% sure) that any organization with one of the 501c 
statuses on this page would be eligible for the solar tax _rebate_.

https://ballotpedia.org/IRS_code,_section_501#:~:text=Section%20501%20of%20the%20U.S.,under%20section%20401(a)


Disclosure: I’m not a tax lawyer, or anything even close. I’ve learned what 
I’ve learned from reading a lot while trying to figure out solar for my 
co-housing. If any of the above is mistaken or confused, I’d appreciate details 
from someone who knows better.


Cheers
Philip