Are Solar Panels Considered Real Property Or Personal Property

48 a 3 a i defines equipment that uses solar energy to generate electricity or to heat or cool a structure as energy property as long as it is not used to heat a swimming pool.

Are solar panels considered real property or personal property.

Unfortunately the answer to that question is. The city argued that the installation of solar panels rendered them fixtures of the residence and thus properly classified as real property. Generally when something of value is physically added to real property what is added is. Borrower owned panels leasing agreements.

The exclusion is not applicable to portable active solar energy systems since they are items of personal property. Since then the michigan tax tribunal and state tax commission have issued varying opinions on whether solar should be considered real or personal property. The concept of using solar energy to power a rental property is an attractive one. Images of 0 electric bills and less reliance on fickle public utility companies are often the first thing that comes to mind when considering the advantages of solar panels.

The proposed opinion relies almost exclusively on an application of the three part common law fixtures test. The ownership and debt financing structures commonly found with solar panels are key to determining whether the panels are third party owned personal property of the homeowner or a fixture to the real estate. In finalizing the proposed regulations the irs and treasury rejected those comments affirming the view that solar panels generally are active business assets that are not standing alone real property though the final regulations note that the mounts for the solar panels and exit wires may qualify as real property under the facts and circumstances test applicable to other inherently permanent structures. Solar energy systems are likely ineligible for the recent property tax exemption made available to eligible manufacturing property because eligible manufacturing personal property specifically excludes personal.

A typical active solar energy system is considered a fixture and thus real property if it meets the tests outlined above. Solar energy systems may lack a statutory categorization as clear as that provided for wind energy but the stc analysis and the existing guidance regarding solar panels support a conclusion that solar energy systems would also be classified as industrial personal property. As real property pv systems generally were subject to assessment if they were newly constructed or a change in ownership occurred. 48 assuming other requirements for the credit are met.

But is that the reality. Common ownership or financing structures include. On december 27 2017 the hearing referee entered her proposed opinion and judgment ruling in favor of the city of ann arbor that the solar panels were real property. In february the state tax commission issued a memo classifying solar panels as residential real property that would likely increase property taxes.