Many people ask us towards the end of the year if they can take the tax credit even with the solar energy system they signed a contract for is not installed yet.
The short answer is: “Yes, because of the Safe Harbor Guidance” that the IRS released in June, 2018
Safe Harbor guidance and defining the word “commenced”
In terms of the calendar, some solar projects span the changeover of the year (2019 to 2020, for example) while still in progress.
In June, IRS safe harbor – Notice 2018-59 (TN) was released. Watchers widely considered it to provide Safe Harbor for solar projects in some stage of progress toward commencing in the next three years.
“Commenced construction” here means either having “started work of a significant nature or… having incurred 5% or more of the cost of the facility [i.e. solar installation] in that year that construction began.”
You can read more about IRS rules and tax credits here. We provide this as guidance. We are solar installers, no tax advisers, so we recommend you reach out to your own accountant.