New York Advisory Opinion TSB-A-85 (1)I: Can a homeowner claim New York's solar and wind energy system tax credit for a rented solar heating unit, plus the installation, piping, and fixtures paid for separately?

Plain-English summary

Alternate Energy Management Corporation asked the Department about a business arrangement it offered homeowners: the homeowner rents a domestic solar heating unit from the company, then separately pays for installing the unit and for the piping and fixtures needed to connect it. The question was whether this arrangement qualifies for New York's solar and wind energy system tax credit under Tax Law § 606(g)(1).

The Department's answer turned on the statute's plain language. Section 606(g)(1) allows the credit for the "purchase and installation" of a solar or wind energy system - it requires an actual purchase, not a rental. Because the homeowner in this arrangement rents rather than buys the solar heating unit itself, that central piece of equipment doesn't qualify for the credit no matter how the rest of the arrangement is structured.

The Department then separately addressed the piping, fixtures, and installation costs the homeowner does pay for directly. Section 606(g)(2) and its implementing regulation (20 NYCRR 103.7) define which solar and wind energy systems qualify for the credit. Piping and fixtures, standing alone, don't meet that definition - they're not themselves a "solar or wind energy system," just supporting components. So even though the homeowner purchased (rather than rented) those pieces, they don't independently qualify for the credit either.

What this means for you

Homeowners considering renting solar or wind equipment instead of buying it

Don't expect New York's energy tax credit to apply if you rent the core solar or wind unit rather than purchasing it outright - the statute requires an actual purchase of the qualifying system.

Homeowners who purchase installation materials (piping, fixtures) but rent the main unit

Purchasing ancillary components like piping and fixtures doesn't create a credit on its own; those items only count toward the credit as part of a purchased qualifying solar or wind energy system, not as a stand-alone purchase.

Businesses marketing solar/wind rental-plus-installation packages to homeowners

Structuring a product as a rental (even with homeowner-purchased installation extras) forecloses the New York energy credit for your customers. If the credit is part of your sales pitch, the core equipment needs to be sold, not leased, to the homeowner.

Common questions

Q: I'm renting a solar heating unit for my home and paying separately for installation - can I claim New York's solar energy credit?
A: No. Tax Law § 606(g)(1) requires the homeowner to purchase the solar or wind energy system; renting the unit disqualifies it from the credit regardless of how installation is handled.

Q: What if I purchase the piping and fixtures myself, even though I rent the main solar unit?
A: That doesn't create a credit either. Piping and fixtures purchased on their own don't qualify as a "solar or wind energy system" under section 606(g)(2) and 20 NYCRR 103.7 - they're only creditable as part of a purchased qualifying system.

Q: Would the outcome be different if I purchased the solar unit outright instead of renting it?
A: Based on this opinion's reasoning, yes - the purchase requirement is the specific problem with the rental arrangement. A homeowner who purchases (rather than rents) a qualifying solar or wind energy system, along with its installation, would be in a different position under section 606(g)(1).

Source

• Landing page: https://www.tax.ny.gov/pubs_and_bulls/advisory_opinions/income_ao_1985.htm
• Opinion: https://www.tax.ny.gov/pdf/advisory_opinions/income/a85_1i.pdf

Original ruling text

New York State Department of Taxation and Finance
TSB-A-85 (1) I
Income Tax
June 6, 1985

Taxpayer Services Division
Technical Services Bureau
STATE OF NEW YORK
STATE TAX COMMISSION
ADVISORY OPINION

PETITION NO. I831123A

On November 23, 1983, a Petition for Advisory Opinion was received from Alternate Energy
Management Corporation, 115 E. 86th Street, New York, New York 10028.
The issue raised is whether the credit for solar and wind energy systems provided under the
personal income tax imposed under Article 22 of the Tax Law is applicable under circumstances
whereby a homeowner rents a domestic solar heating unit and then pays for the installation of the
unit and for piping and fixtures.
Section 606(g)(1) of the Tax Law provides in relevant part as follows:
(1) A taxpayer shall be allowed a credit against the tax imposed by
this article for the purchase and installation of a solar or wind energy
system by a taxpayer in his principal residence, if such residence is
located within the state ....
The portion of the system which the homeowner rents from petitioner (the domestic solar
heating unit) does not qualify for the credit under section 606(g) of the Tax Law. That section
specifically provides that in order to qualify for the credit, the homeowner must purchase a solar or
wind energy system. Equipment rented by the homeowner does not qualify for the credit.
Additionally, section 606(g)(2) of the Tax Law and the regulations promulgated thereunder
(20 NYCRR 103.7) specify the solar and wind energy systems which qualify for the credit. The
piping and fixtures which are purchased by the homeowner and amounts paid for installation clearly
do not qualify by themselves as solar or wind energy systems as defined in the Tax Law and
regulations. Accordingly, they do not qualify for the credit allowed under section 606(g) of the Tax
Law.

DATED: March 18, 1985

FRANK J. PUCCIA
Director
Technical Services Bureau

NOTE: The opinions expressed in Advisory Opinions
are limited to the facts set forth therein.

RODERICK G. W. CHU, COMMISSIONER
TP-8 (3/83)

GABRIEL B. DiCERBO, DEPUTY COMMISSIONER
FRANK J. PUCCIA, DIRECTOR