Cohousing-L Mailing List: Re: DYI solution for tax credits?

[JoAnna Allen (jowooallen]

My community is urban in Oakland CA, a 4 story building, just 6 years 
old.   The description below  is from one of our residents who took the 
lead on getting solar on our roof early in our existence as a 
community.  We residents chipped in to buy "shares" in this investment. 
   see      Phoenixcommons.com

/When we did our installation, we used a middle entity, where we split 
tax credit. What happened, is:/

 * /An entity called Collective Sun fronted half the value of the tax
   credit toward the purchase of the panels;/
 * /PC paid the remaining cost of the panels;/
 * /One of Collective Sun's investor's takes title to the system (along
   with maintenance costs) and is thus enabled to take the full value
   of the tax credit over 6 years;/
 * /At the end of six years the title gets passed to PC./

/Not perfect, but the best I found that we could do here with the laws 
the way they are/

Thanks, JoAnna Allen


On Aug 13, 2022, at 9:50 PM, David Mandel <dlmandel [at] gmail.com> wrote:
> > We're looking at installing solar generation on some of our roofs, first on
> > two carports where EV chargers will live, then if possible on more
> > sun-favorable roofs throughout the community, in a way that we could all
> > share the cost and the benefit.
> > Federal tax credits are available for solar installation, and that works
> > well enough for individual homeowners who have sufficient income to pay
> > taxes. But as a homeowner association our income tax burden is negligible.
> > The typical solution for tax-exempt entities that want to install solar
> > (say, on the roof of a church or a school) is to contract with specialized
> > investors who become the actual owners of the system, get the tax credits
> > ... and sell the power to the nonprofit entity at a discount while
> > retaining a tidy profit as long as the tax credits apply (typically five
> > years, I'm told, maybe 10 under the new federal legislation that just
> > passed).
> > So I'm wondering if there's a way to avoid using such a middle person and
> > losing out on some of the tax advantages. For instance, what if some or all
> > of our residents form a partnership or LLC that would operate similarly but
> > pass on a much larger part of the profit to the community? Has anyone tried
> > or maybe succeeded with such a plan? Or even if not, do you have some
> > financial expertise to opine on whether this would be viable?
>
> Hi David,
> We have a similar situation here at Pacifica in Carrboro, NC. Our Common House roof it was 
> built with solar in mind. It’s a superb location (south facing, unobstructed, 
> co-located w/electrical meter, preferred angle for our latitude), all it needs is panels. 
> However, our HOA is a for-profit entity for tax purposes, and we pay something like $50 per 
> year in taxes. Federal income tax credits wouldn’t work for us.
>
> I talked with our accountant and a couple of solar installers, and was advised that the 
> typical solution for folks in our situation is to set up an LLC that claims the credits. 
> Ideally the LLC would be at arms length from the HOA (e.g. not the same members). As you can 
> imagine, it’s non-trivial to set up the LLC correctly and make sure the money flows 
> when and where it should. This isn’t an attractive option for us.
>
> I was also told that if one’s HOA is a non-profit, larger and less complicated credits 
> are available. This sounded appealing, but reincorporating our HOA as a non-profit is not a 
> mountain I want to try to move just to make it viable to install solar panels, so I 
> didn’t research that option very much.
>
> I’m intrigued by suggestions that the new federal legislation might change the 
> situation for folks like us. I have an opportunity later this week to talk to some 
> solar installers (the company that installed panels on my personal residence) and I'll 
> ask them what they've heard about this.
>
> Cheers
> Philip
>
>
>
>
>
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