What would you recommend (Energy Credit)

[ILLMAS]

I have a TP that is considering installing solar panels, however he has had a very small tax liability over the years, would you recommend for him to go for it to save $1,400 (average tax liability) but to spend $50K for the panels? 

Thanks

[rfassett]

I preach to my clients all the time - economics first, tax second.  If the purchase makes economic sense, then let's talk about the tax benefits - and then we can marry the two together.  In your case, he must have some other reason for wanting to spend $50,000 on solar panels beyond per economics or tax benefits.  Case in point, I just spent $7,000 on a whole house generator.  It makes very little economic sense, has no tax benefit, but I sleep way, way better at night now here in the back woods of PA.  In your guy's case, he would need to save a ton of money on his energy costs to make this make economic sense.  If his goal is to simply get off the grid and he is willing to pay a price to do that, then by all means, go for it and the tax benefit is just a bonus.

But if you are asking the simple question of whether to tell a client to spend $50,000 to save $1,400 in tax - no, I would not.

[RitaB]

14 minutes ago, rfassett said:

I preach to my clients all the time - economics first, tax second.  If the purchase makes economic sense, then let's talk about the tax benefits - and then we can marry the two together. 

You nailed it there.  I could not believe I had a lady in here worried about what she was going to make on the sale of a rental.  I think she was actually trying to figure out if she should sell it for less because of taxes.  I stopped her and said, "STOP thinking that way.  Sell it for all you can.  Taxes have ZERO to do with the decision about what to sell this house for."

I thought her husband was going to cry he was so happy.  "Yes.  Thank you, OMG, thank you for telling her that."

[BulldogTom]

I tell my clients "don't let the tax wag the dog".  If it makes sense without the tax credit to install the panels, do it.  If you want to "green" the planet because you don't like fossil fuels and you don't care about the economics, do it.  If you want to use this as a way to save tax, I will run the numbers for you so you can make an intelligent tax decision.  But please....please....PLEASE do not take tax advice from the salesmen.

Tom
Newark, CA

[kcjenkins]

I agree.  The fact is, the economics of solar vary, depending mainly on location, but it's a decision that should not be based on taxes. 

[RitaB]

2 hours ago, ILLMAS said:

I have a TP that is considering installing solar panels, however he has had a very small tax liability over the years, would you recommend for him to go for it to save $1,400 (average tax liability) but to spend $50K for the panels? 

To answer this particular question:  Heck no, I wouldn't recommend that.