BSW Tax Blog

Nicole Gould

The Louisiana Department of Revenue (LDR) has noticed its intent to revise the regulations affecting the state income tax credits for wind and solar energy systems (Wind/Solar Credits). The Wind/Solar Credits can be generally taken by the owner of a Louisiana residence or residential rental apartment for 50% of the first $25,000 for the purchase and installation costs of the wind or solar energy systems. The changes are not yet effective, but for those people in the planning stages of large projects, this could be critical information. The biggest change in the Wind/Solar Credit is to no longer qualify multiple systems per residence or residential apartment dwelling for the credit. The existing regulation permits the Wind/Solar Credits for each complete system upon a residence or apartment, and industry custom has used this to construct multiple complete systems in order to stack the credit for total construction costs in excess of $25,000. The proposed revision makes clear that only one wind or solar system will qualify for the credit. The other reductions to the credit include:

1. The deletion of the ability to include uncapitalized finance costs as qualified system costs.
2. Any replacement items added to an existing system cannot qualify for the credit. The credit will only apply to the purchase and installation of complete system.
3. Tree trimming and removal costs are also being excluded from qualified system costs.
4. Shared inverters are no longer a stated exception to having a complete system. Arguably, a system is incomplete and does not qualify if it shares an inverter with another system, a likely scenario with apartments.
5. Solar energy systems will have additional construction and certification requirements before qualifying.

But where something is taken away, something is given. The credit currently permits “mounting systems” as part of eligible costs for the solar energy system credit. The regulation revision will specifically allow costs for a free-standing, ground-mounted solar energy system, which is a separate structure from the residence. The revision permits costs for the structure and its foundation that are necessary to mount the solar energy system to the specified height. The allowed structure costs do not include additional walls, interior finishes, foundations, roofing structures not directly related to the solar energy system, or any other any other addition not directly related to the solar energy system. If you’re thinking of gazebos, car/boat ports, and the like, then you see the added benefit to the revision. The LDR will hold a hearng on the proposed changes on September 27, 2012, and if there are no objections or changes, the revisions will eventually take effect.

UPDATE: These changes were promulgated at LAC 61.I.1907