Associations Can Pass-thru Residential Tax Credits to Owners Within the Community!!
Want to create a win/win for your association? Reduce energy consumption/costs and give owners a reduction in their taxes?
If your association makes an energy-efficient tax-qualifiable purchase such as solar panels, the cost of the panels can be passed through to owners so that they can take advantage of the IRS offered tax credits.
Associations are generally not a "pass-through" entity for tax purposes. This means that as a general rule associations are taxed on their own transactions and pay any corresponding taxes. However, as we all know to any general statement there are exceptions. The IRS has stated in IRS Publication 17 that if you are a member of an association, you are treated as if you have paid your proportionate share of any costs paid by the association and you can therefore take your share of these expenditures on your own return. There are some strict guidelines on the types of expenditures that are covered and time restrictions. So, first, check with us or your local CPA for more details and second, make sure you let owners know their proportionate share and that they are entitled to apply for the tax credit on their next federal income tax return using IRS Form 5695.
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