As far as the Residential Energy Credit is concerned, Form 5695 & its instructions are the governing documents.[/quote]
Hello Gary and All
I was going to pass-up on this issue, but my honest desire to assist got the better of me. There is actually more documentation and background available that I think supports the assertion that an RV (any kind) can qualify for the Residential Energy Efficient Property tax credits. I"ll try to make my case in as organized fashion a I can.
My business and personal tax accountant of 20 years has indicated that my planned expenditures to install solar equipment are eligible. Her parents were fulltime RVs for over 10 years, so I trust she has a better grasp of the tax issues than the H&R Block down the street. Disclaimer! I'm not an attorney or accountant, so one should always seek professional advice for their particular circumstances. Consider the following information and proceed accordingly please.
This post is exclusively about RVs qualifying to claim alternative energy tax credits. It is NOT about mortgage interest, second homes, second residences, RV loan interest or any other of the befuddling language that has served to muddy this issue. As I've cautioned in other posts, trying to use the logic of one bureaucratic regulatory situation and applying it to another set of bureaucratic rules will only result in misunderstanding and confusion.
5695 defines "Home" as follows:
A home is where you lived in 2016 and can include a house, houseboat, mobile home, cooperative apartment, condominium, and a manufactured home that conforms to Federal Manufactured Home Construction and Safety Standards
It has been stated that "RVs do NOT conform to manufactured home standards or to any residential construction standard" and they therefore fail the test of "home" per the definition in "blue" above. Please consider this. In the definition, only the words "manufactured home" are being modified by the words "conforms to Federal Manufactured Home Construction and Safety Standards. The limiting modifier does not apply to house, houseboat, mobile home, cooperative apartment, or condominium, but only to the adjective and noun "manufactured home". I think we would all agree that houses, houseboats, etc. are not required to conform to safety standards for manufactured homes and therefore the modifier can only apply to MHs. I mean the safety standards themselves are called "Federal Manufactured Home" standards, stating pretty clearly that they apply to only manufactured homes. A few months, HUD made this abundantly clear by separating RVs from "manufactured homes" once and for all! The inclusion of that requirement in the IRS pub is, IMHO, to reinforce HUD's on-going effort to legitimize manufactured homes, many of which are subsidized by the federal gov't.
So, to me, the fact that RVs do not conform to the standards required for manufactured homes is not a disqualifying factor for potential energy credits.
The entire (alternative) Residential Energy Tax credit program actually falls under the auspices of the USEPA's and the DOE's Energy Star Program. If one goes back to their definitions and eligibility, you will find that the qualifying properties use the term "dwelling" -- NOT home.
Secondly, Internal Revenue Bulletin: 2009-19, dated May 11, 2009 (Notice 2009-41) entitled Credit for Residential Energy Efficient Property states, in part, the following "(a) Qualified solar electric property expenditures are expenditures for property which uses solar energy to generate electricity for use in a qualifying dwelling unit. So again, we see the use of "dwelling unit" as opposed to home.
This same IRS bulletin states that a "(2) Qualifying Dwelling Unit is (a) Except as provided in section 3.01(2)(b) of this notice, a qualifying dwelling unit is a dwelling unit that is located in the United States and is used as a residence by the taxpayer. (the exception is for fuel cells and not relevant here)
So, as I understand it, nothing in the definition of "qualifying dwelling unit" prevents my RV from being eligible as long as I'm in the United States (not Baha, or Mexico for example) and I'm a taxpayer and, oops, I use it as my residence, which as a full-timer without any other dwelling structure is pretty evident.
Caution! The whole energy credit program includes more than just solar. It deals with geothermal, wind, insulation, fuel cells, windows etc. Some of the credits are only applicable to certain situations, so if you're interested in SOLAR credits, pay attention to the details of what qualifies for the solar credits including any exclusions to eligibility.
Think this isn't complicated??? See the following link for pages and pages of Q&A regarding the credits. Remember, this all started back in 2008 and has been expanded, updated, and reauthorized by Congress numerous times.
https://www.irs.gov/pub/irs-drop/n-13-70.pdf
You will see that in it's wisdom, the IRS will use the term, home and residence, but always goes back to "qualified dwelling unit" when referring to solar systems.
and from http://www.parkertaxpublishing.com/public/IRS_energy_credits_homeowners.html
Credits May Be Available for a Second Home in Some Circumstances
Improvements made to a second home are not eligible for the credit under Code Sec. 25C because that provision requires that qualified energy efficiency improvements and residential energy property must be installed in or on a dwelling unit owned and used by the taxpayer as the taxpayer's principal residence (within the meaning of Code Sec. 121).
With respect to the credit under Code Sec. 25D, fuel cell property credits are not available for second homes because fuel cell property must be installed on or in connection with a dwelling unit that is used as the taxpayer's principal residence.
However, a taxpayer may claim a Code Sec. 25D credit for other qualifying properties that are not fuel cell properties. Thus the credit may be available for solar electric property, solar water heating property, small wind energy property, and geothermal heat pump property installed in or on a dwelling unit used as a second home or a vacation home by the taxpayer.
So, what is the meaning of "taxpayer's principal residence" in Code Sec. 121? Well, that section deals only with the exclusion of gain from sale of a principal residence. I'm beginning to see the picture, I think the IRS is trying to wrap up every loop-hole so that rentals, joint ventures, and the myriad of other tax evasion schemes are EXCLUDED from qualifying for the tax credits.
Back to dwelling. There is already an IRS legal precedent that an RV is a dwelling. In 2014, the United States Tax Court held that a couple selling insurance had incorrectly claimed business expenses related to the use of their RV -- thus asserting the RVs use was actually as a "dwelling unit".
http://www.ustaxcourt.gov/InOpHistoric/JacksonMemo.Wherry.TCM.WPD.pdf
I'll quote the relevant part of the IRS court ruling:
II. Petitioners? RV as a Dwelling Unit
Now we must address respondent?s secondary argument, namely that
section 280A prevents petitioners from taking any deduction with respect to the
RV. Section 280A(a) and (b) provides the general rule that individual and S
corporation taxpayers cannot deduct expenses ?with respect to the use of a
dwelling unit which is used by the taxpayer during the taxable year as a residence?
unless such a deduction would be allowable ?without regard to its connection with
* * * [the taxpayer?s] trade or business * * * [or] income-producing activity?.
Use as a residence is a defined term. Sec. 280A(d). Generally, ?a taxpayer
uses the dwelling unit during the taxable year as a residence if he uses such unit
(or portion thereof) for personal purposes for a number of days which exceeds the
greater of--(A) 14 days, or (B) 10 percent of the number of days during such year
for which such unit is rented at a fair rental.?
Sec. 280A(d)(1).
?Dwelling unit? is also a defined term and ?includes a house, apartment, condominium, mobile home,
boat, or similar property?. Sec. 280A(f)(1)(A). This Court has previously held
that a motor home qualifies as a dwelling unit within the meaning of section
280A(f)(1)(A). See, e.g., Haberkorn v. Commissioner, 75 T.C. 259, 260 (1980);
Dunford v. Commissioner, T.C. Memo. 2013-189, at *23-*24; Perry v.
Commissioner, T.C. Memo. 1996-194, slip op. at 14.
Although we use the more modern term throughout this opinion, an RV and a motor home are one and the
same thing. Petitioners and counsel used the two terms interchangeably at trial.
Accordingly, petitioners? RV is a dwelling unit for purposes of section 280A.
(end of court case quote)
Maybe I expect to much reasonableness, but to me, the IRS can't have it both ways. Given the same usage pattern, the IRS can't claim an RV is a dwelling unit - already defined as far back as 1980 -- and then turn around and say it isn't. At least that would be my argument.
Now, if you aren't already bored and asleep -- one more thought. The Energy Tax Credits were started back in 2008, and the credits for ALTERNATIVE energy have been extended out to 2022 or thereabouts (the 30% expires in 2019 and the % goes down each year after that). The whole purpose of the credits was to stimulate investment in alternative energy, to stimulate production and growth of alternative energy equipment, (as opposed to fossil fuels), and to CREATE markets for alternative energy systems. Congress' purpose was not to give homeowners a break. It makes no sense to EXCLUDE any section of a potential market, i.e. RVs that qualify as dwellings units, so I don't think there is any attempt on the part of USEPA, DOE or the IRS to be stingy and to narrowly interpret Congressional intent on this issue. I do think they are concerned to exclude and weed-out shady circumstances, but the tax court has already pretty much decided that an RV used full time is a "dwelling" and that's not under-handed.
So in conclusion, I'm suggesting my full-time RV is a dwelling unit under IRS tax precedent, it is my residence within the meaning of section 121 and that my solar system is qualifying property and I can claim the allowable 30% credit as long as my system is paid for and put into use by the end of 2019. Furthermore, my RV may qualify as a vacation or second home (depending on my usage) and would also be eligible for certain credits, although they may be more limited.
My take, your circumstances may be different. Linda
