Can I get a solar tax credit on a rental property in 2026?

Your rental may qualify for the Section 48E credit if you own the system and it is placed in service by December 31, 2027. Confirm with a CPA how it applies to your return.

What happens if I sell the rental within five years?

Part of the credit is recaptured. The share repaid starts at 100 percent in the first full year and drops by 20 points each year, reaching zero after five years.

Is the 30 percent credit available for my own home or only for rentals?

Only rental and business property can use Section 48E. The federal residential credit for a home you live in does not apply to systems placed in service after December 31, 2025.

Rental property solar

Solar for Rental Property Owners

Name: AJ Long Electric
Address: 2724 Dorr Ave, Suite 102, Fairfax, VA, 22031, US
Telephone: (571) 444-6886

A rental is on a different federal credit than your own home. Solar you own on a rental you depreciate may qualify for the Section 48E credit if it is placed in service by December 31, 2027. Confirm how it applies to your return with a CPA.

Get a roof study Call (571) 444-6886

Reviewed 2026-09-24

Colonial-style brick home with dark rooftop solar panels and closed exterior electrical equipment

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Family-owned

Since 1996

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VA 2705031092

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Answer first

Does solar make sense on a rental property?

It can, and the tax picture is different from your own home. The federal residential credit does not apply to systems installed after December 31, 2025, but solar you own on a rental home you depreciate may qualify for the Section 48E clean electricity investment credit if it is placed in service by December 31, 2027. The credit follows ownership of the system, not who pays the electric bill. Confirm with a CPA how it applies to your return.

A rental rooftop system is far under 1 megawatt, so it may qualify for the 30 percent Section 48E rate without meeting the prevailing-wage and apprenticeship requirements large projects face.
Rental solar is 5-year depreciable property under the tax code, and your CPA confirms how the depreciation applies.
The tenant who holds the utility account gets the lower bill. You claim the credit as the owner.
A typical 8 to 12 kW rooftop system installs for $19,000–$34,000 cash, which is $2.40–$2.85/W.

Why a rental uses a different federal credit

The IRS is clear that the residential clean energy credit is not available for property placed in service after December 31, 2025. That credit was for a home you live in.

Section 48E is a business credit. It applies to property for which depreciation is allowable, and a rental home is depreciable while your own residence is not. That is why a landlord's rooftop system may qualify when the same system on your own home does not.

The base 48E rate is 6 percent. A facility with a maximum net output under 1 megawatt AC may qualify for the 30 percent rental and business rate without the prevailing-wage and apprenticeship requirements. Every residential rooftop is under that line.

The December 31, 2027 deadline and the equipment rule

Under Section 48E, the credit does not apply to solar property placed in service after December 31, 2027. Fairfax County's Going Solar page states the same deadline for commercial and other non-residential systems, with an exception for projects whose construction began on or before July 4, 2026. For a rental starting now, plan to be installed and operating before the end of 2027.

Placed in service means installed and running, not signed. The calendar runs through the county permit, the utility review, and permission to operate, so we build the schedule backward from that date.

Equipment sourcing also matters now. For construction beginning after December 31, 2025, the tax code excludes a system that includes material assistance from a prohibited foreign entity, a category the code defines. Ask for the equipment list with the proposal so your CPA can review it.

The credit follows ownership, not the electric bill

Eligibility turns on who owns the depreciable system, not who pays the utility. Your tenant can pay the electric bill and you still claim the credit as the owner. Keep the system on your books as the owner rather than leasing the panels to your tenant.

The bill savings follow the utility account. Net metering credits land on the account for the meter the array connects to, so the tenant who holds that account sees the lower bill. How that shows up in rent is your decision.

Net metering stays with the house when tenants change. Dominion treats the home as a net metering premise until it is told the system has been removed.

Depreciation, recapture, and the passive rules

The tax code lists property that qualifies for the 48E credit as 5-year property. Only half of the credit reduces the system's depreciable basis. Bonus depreciation is generally available on the rest, and your CPA confirms how it applies to your return.

The credit vests over five years. If the system stops being qualifying property within five years, part of the credit is repaid: 100 percent in the first full year, then 80, 60, 40, and 20 percent. Selling the rental or moving into it yourself inside that window triggers recapture.

Rental real estate is a passive activity under the tax code. A passive activity credit is limited to the tax on passive income, and the unused part carries to the next year. Whether you use the full credit in the first year depends on your tax situation, which is a CPA question.

The electrical side of a rental

Rentals tend to have older panels and a history of small changes by different hands. We check the busbar and main breaker under the 120 percent rule, the grounding, and the service before we design anything, and a panel replacement, when needed, is itemized at the published $3,500–$7,500 range.

We schedule around your tenants, set the monitoring up in an account you own so you can see production from anywhere, and put the disconnect where a tenant or first responder can find it.

In Fairfax County, a townhouse or a detached one- or two-family home is residential for permit purposes. Condos and apartment buildings are commercial under the building code and need commercial permits. Fairfax County's five-year solar equipment tax exemption is open to both residential and commercial property.

Solar-ready panel upgrade by a licensed electrician

What we hand you for your CPA

Your CPA will ask for records, and we produce them as part of the job: an itemized invoice that separates the solar equipment from panel and other electrical work, the permit final inspection, the permission to operate date, and the equipment list with manufacturers and model numbers.

Straight answers

Questions

Can I get a solar tax credit on a rental property in 2026?: Your rental may qualify for the Section 48E credit if you own the system and it is placed in service by December 31, 2027. Confirm with a CPA how it applies to your return.
My tenant pays the electric bill. Can I still claim the credit?: Yes. The credit follows ownership of the system, not who pays the utility. Keep the system on your books as the owner rather than leasing the panels to your tenant, and have your CPA confirm the details.
What happens if I sell the rental within five years?: Part of the credit is recaptured. The share repaid starts at 100 percent in the first full year and drops by 20 points each year, reaching zero after five years.
Can I use the whole credit in the first year?: It depends on your tax situation. Rental real estate is a passive activity, and a passive activity credit is limited to the tax on passive income, with the unused part carried forward. Your CPA confirms how and when you apply it.
Is the 30 percent credit available for my own home or only for rentals?: Only rental and business property can use Section 48E. The federal residential credit for a home you live in does not apply to systems placed in service after December 31, 2025.

Sources

Next step

Price solar for your rental

Send the rental's address, a recent electric bill, and your target date. We give you a written proposal and a schedule built backward from the December 31, 2027 deadline. The estimate is free.